This week, two media giants embarked on uncharted territory when Comcast’s Peacock streaming platform (CMCSA) launched, while Netflix (NFLX) suffered sudden turmoil after a lackluster second earnings report. trimester.
The streaming giant missed earnings estimates, but outperformed both revenue and net global paid subscribers. It also added more than 10 million users in the last quarter (compared to the expected 8 million).
But what appears to be scaring investors is the company’s disappointing subscriber growth guide for the third quarter, and executives explained in the letter to shareholders that “growth is slowing as consumers outperform. Covid’s initial shock and social constraints. ” Investors scoffed at the shares on the news, sending shares down nearly 7% at the close on Friday.
(Courtesy: NYT, Netflix)
Historically, Netflix has provided conservative forecasts, and Manhattan Venture Partners analyst Santosh Rao told Yahoo Finance that investors “really have to look long term” when it comes to the streaming giant’s place in broadcast wars. .
“The whole secular trend is towards streaming, and these guys are in the right place,” added Rao.
Simultaneously, Netflix also revealed that Chief Content Officer Ted Sarandos will be promoted to co-CEO, serving alongside current CEO Reed Hastings.
The move is interesting to the company, but it underscored the importance of original content in an overly saturated broadcast world.
Netflix chief content officer Ted Sarandos joins Reed Hastings as co-CEO
Sarandos, who frequently establishes alliances with television studios and producers, is known as the platform’s behind-the-scenes negotiator. He is seen largely as the unofficial face of Netflix, especially in Hollywood.
But despite the change, Hastings has doubled in the fact that this is not a sign that he will be leaving the company anytime soon, explaining in a letter to shareholders that “Ted has been my partner for decades. This change makes what was already informal formal: that Ted and I share Netflix’s leadership. ”
Meanwhile, the platform is eager to restart production after coronavirus delays. By 2021, Netflix said the pandemic “will lead to a more weighted content roster in the second half in terms of our big titles, although we anticipate that the total number of originals for the entire year will continue to be higher than 2020.”
It’s an encouraging sign as more competitors enter the space, with NBC’s Peacock making its streaming debut earlier this week.
The new platform, which is based on a three-tier pricing strategy, hopes its ad-supported premium offering will help drive growth. With Peacock pricing, you can choose a completely free tier with access to most content with ads; Or pay $ 5 per month to access the full catalog (also with ads), or $ 10 per month without ads.
NBC’s Peacock officially enters the streaming fight
According to a recent poll by The Trade Desk, it’s a tactic that might work, as more Americans seem to prefer seeing ads rather than paying high subscription costs.
The survey found that 35% of millennial consumers would prefer to see a free streaming service with ads for a cheaper subscription, compared to 31% who would rather pay for an ad-free subscription.
Additionally, 2 out of 3 millennials would increase ads to lower monthly streaming costs, according to the survey.
