Netflix Inc. ignored the potential effect of a streaming rivals offensive, but as a surge of well-funded streaming services by big-name companies is about to be launched, the voice of executives has shifted.
Netflix NFLX has maintained over the years that "there is room for multiple parties to have enticing offerings" in streaming media, and that new competitor would not "materially affect our development because the shift from traditional to on-demand programming is so huge."
At the beginning of the year, as plans for competing for streaming services were arriving rapidly, executives attempted to change the conversation by saying, "We compete with (and lose to) Fortnite more than HBO."
Netflix finally spilled the beans, figuratively, when it declared Q3 earnings late Wednesday: the emergence of a host of new platforms from rival firms Apple Inc. (AAPL) and Walt Disney Co. (DIS) is going to be bad news for its new-subscriber growth.
By the start of the current fiscal year, when efforts for competitive streaming began to emerge, the company tried to change course by saying it is "struggling with (and losing to) Fortnite more than HBO." Netflix finally admitted the inevitable when it reported profits in the third quarter on Wednesday afternoon.
The company expects subscriber growth in the usually strong fourth quarter and throughout the year to fall year-over-year, even with a full lineup of new shows.
"It will be chaotic to release such new services," Netflix officials said to investors in their quarterly report. "There may be a moderate headwind to our near-term growth, and we have tried to take this into account in our guidance."
Such remarks were played down by Netflix officials in the investor review session. Once asked about the language change to the competitive landscape, Chief Financial Officer Spencer Neumann said: "there will certainly be some excitement and some test of those new service services."
"Fundamentally, it's more of the same," Netflix Chief Executive Reed Hastings responded. "Disney's going to be a great competitor, Apple's just starting, but they're going to have some great shows as well. But again, they still deal with traditional television. We are all relatively small in traditional programming."
This sounds more like the long-held slogan of Netflix that it expects to win in the long run because consumers switch from a linear template to the on-demand entertainment alternative invented by Netflix.
As it has been considering rivals such as Amazon Prime and Hulu for years, Netflix insisted that gradually getting more customers into the streaming world would help secure a greater presence in a completely changed media environment.
