After boasting about one of its biggest quarters to date, Netflix CEO Reed Hastings doesn’t seem too concerned about Apple and Disney’s upcoming streaming services.
Hastings and Netflix chief financial officer Spencer Neumann issued Netflix’s first quarterly earnings for 2019, directly addressing recent presentations from Disney and Apple about their forays into streaming. The letter to investors recognized that Disney and Apple are both “world class consumer brands,” adding that Netflix is “excited to compete.” While the field of competition is growing, neither Hastings nor Neumann is worried about Disney or Apple stealing subscribers or impacting Netflix’s own growth, considering the “transition from linear to on demand entertainment is so massive.”
Netflix added close to 10 million subscribers in the last quarter alone, making it the “highest quarterly paid net adds” in the company’s history, according to the letter. The majority of those subscribers came from international territories where Netflix is investing heavily in creating more original content. Just 1.74 million subscribers joined in the US compared to 7.68 million internationally.
“We believe we’ll all continue to grow as we each invest more in content.”
“We believe we’ll all continue to grow as we each invest more in content and improve our service and as consumers continue to migrate away from linear viewing (similar to how US cable networks collectively grew for years as viewing shifted from broadcast networks during the 1980s and 1990s),” the letter reads.
Their comments echo Hastings’ previous statement from October 2017 about Disney’s standalone streaming service, Disney+. Investors first asked about Hastings’ thoughts following Disney’s decision to end its relationship with Netflix early and pull all original content off of Netflix by the end of 2019. Hastings recognized that although Disney was an “enormously significant brand, in terms of its significance relative to growth,” he reiterated that Netflix has done “incredibly well without it” internationally. Ted Sarandos, Netflix’s chief content officer, feels similarly.
“Whether or not one of our partners decide to produce for us or compete with us, that’s really a choice they have to make based on their own business,” Sarandos also told investors in October 2017.
Hastings and Neumann’s letter didn’t address the recent price announcement for Disney+ ($6.99 per month or $69.99 annually) or Apple’s silence on its pricing. Instead, they addressed a series of recent price changes in various countries, including the United States. Neumann and Hastings wrote that, much like the price hike for Canadian subscribers in Q4, they expect gross subscriber additions to be unaffected and “see some modest short-term churn effect as members consent to the price change.”
Disney+ is set to launch on November 12th.