With Netflix set to report third quarter earnings on Monday, analyst Michael Nathanson is predicting in his latest report (sub. req.) Netflix will post “soft results.”
The slowing of the SVOD juggernaut is an interesting development for the cable industry, which has watched Netflix totally disrupt linear TV viewing and internet-usage habits.
While subscriber growth remains strong, and price increases have increased margins, the SVOD service, Nathanson said, is facing increased competition not only from rival SVOD companies including Hulu and Amazon Prime, but also the SVOD platforms currently being launched by programmers and distributors.
Next week, for example, Turner Networks will launch movie-buff platform FilmStruck, the first of several SVOD platforms being hoisted by the Time Warner Inc. programming unit.
Related article: Turner to launch SVOD platform FilmStruck on Oct. 19
The analyst also lists the issue of ISP broadband policy shifting to usage-based pricing. Today, it was reported that Cox Communications has joined Comcast and AT&T in upping the usage limit on most of its tiers to 1 terabyte.
Related article: Cox ups data usage cap to 1 TB
But as Netflix ramps up technologies including 4K/UltraHD and HDR, that limit won’t provide nearly as much head room.
Nathanson also lists other factors, such as under-performance in certain international territories, as well as the increased spending on original series not yielding as many hits as it used to.
Netflix was the top-performing stock of 2015. But a relatively soft performance in the second quarter resulted in the loss of 25 percent of the company’s stock value, with investors concerned about the service’s ability to maintain growth.
Other analysts predict that Netflix’s recent round of U.S. price increases could result in the company once again missing customer growth targets.
"People don't like price increases; it reminds them that they are paying something for the video service like cable TV," Laura Martin of Needham told TheStreet.com.