Mexico. Last week Netflix reported its global numbers for the second quarter of 2019, where there was an increase in customers globally of 2.7 million, a figure far from the growth of 5 million that had been projected since last year.
Additionally, after 8 consecutive years gaining customers in the North American market, for the first time it lost around 130,000 subscribers. This was the news that shook the markets, causing a loss of around 10% in the shares of the North American giant as a result of the issuance of said report.
These figures indicate two things: On the one hand, the competition that Netflix begins to face due to the changes that are observed in the OTT ecosystem, where many companies have chosen to announce their entry into that market, which has generated speculation about the future of Netflix. Companies such as: Disney, Warner, Apple TV, NBC, among others have announced their entry in the coming months. Just to give a more recent example, in Britain a new BBC and ITV service was announced which will be launched in the autumn at a cost of £5.99 pounds (around $143 pesos) called BritBox. This initiative of both British networks seeks to gain market at the expense of Netflix whose volume of subscribers exceeds 10 million in the United Kingdom.
On the other hand, many of these companies have decided to favor their content by ceasing to share it and therefore weakening the catalog of other platforms. However, Netflix's response to the migration of content from other production companies is clear, increasing its catalog by generating its own content. Which is why they have budgeted more than 15 billion dollars for content development this year.
But the generation of content will not only be global, but will focus on the growth of international markets, which prevented the numbers issued from being even more negative for the company.
Netflix is looking for the production of local content, focused on certain regions in order to penetrate these markets where the growth potential is considerable. In fact, they mention the importance of markets like India, where the company expects significant growth and is about to launch five new original programs.
At the end of the day, all these changes we are observing are just the tip of the iceberg, underwater there are still many strategies and alliances that remind us that content is still King. Definitely, next year will be decisive to know how large companies such as Disney, Warner and Apple are positioned in the market and how the OTT market is rebalanced, which for the moment is clearly dominated by Netflix.
Text written by Gonzalo Rojon of The Competitive Intelligence Unit.
