Cord-cutting continues apace – and Netflix is so dominant domestically, it will have to look to international markets for growth
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Cord-cutting continues apace – and Netflix is so dominant domestically, it will have to look to international markets for growth

According to a report from researchers at PwC, streaming video on demand (SVOD) services are continuing to disrupt traditional television networks at a staggering pace. The report, catchily titled the Global Entertainment & Media Outlook 2019 – 2023, predicts that streaming services’ collective US revenue will increase by an incredible 64% over the next five years to almost $24 billion annually. Television networks, meanwhile, will see their collective revenue shrink by 16% over the same period.

That’s good news for Netflix – the industry’s undisputed king. But the report also claims that this company is already so dominant at home, it may have to look elsewhere for further growth.

Netflix’s share price has appreciated by 39% so far, year to date

Netflix June 7

Source: Yahoo Finance

The report makes the following comments over the company: “Netflix appears to be nearing its peak subscriber point in the U.S. The first-mover advantage in streaming video that Netflix has capitalized on to date continues to be eroded, as the industry begins to fragment, with more and more companies entering the market, from pay-TV heavyweights to specialized, niche players.”

However, Netflix itself is still primed for growth. On its most recent earnings call, the company’s CEO, Reed Hastings, said: “There’s a ton of competition out there and Disney and Apple add a little bit more, but frankly I doubt it will be material, because again there’s already so many competitors for entertainment time.”

Add to that the fact that Netflix is outspending all its rivals through its (so far very successful) original content strategy, and Netflix looks to be in a strong position. Last year, the company spent a record $8 billion creating its own shows. This year, it will spend $13 billion. Lastly, much of the programming that money buys is already aimed at international markets. Go on Netflix today, and you can find original films and shows in Hindi, Mandarin, Spanish, Romanian, and more. If competitors are chasing Netflix at home, the company is already becoming a dominant force globally.

Disclosure

Dominion holds Netflix in its Global Trends Ecommerce Fund.


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