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Straight Talk Media & Entertainment

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Netflix reported its third quarter 2015 results on October 14, announcing that it had missed its guidance of 1.15 million new subscribers added in the US. Initial news coverage spoke of “disappointing” results and two days on Netflix’s share price dropped from $110 to around $103 (at the time of writing).

However, Ovum believes the negative news is overstated: Netflix, which added a respectable 880,000 new subscribers in the US in the third quarter, continues to go from strength to strength. It remains the clear domestic SVOD market leader – with a 65% market share in 2015 according to our analysis – and by far the dominant player internationally, driving SVOD markets everywhere. This year, the SVOD pioneer is on track to add more than 5 million new subscribers in the US for the fourth consecutive year. Hardly a disappointing run!

Notes on our pre-3Q Netflix forecasts

Ovum’s pre-3Q Netflix results forecasts estimate that Netflix will have a total of 71.9 million global subscribers at the end of 2015. This is 3 million short of Netflix’s latest estimate of 74.3 million globally, which Ovum believes to be a little on the optimistic side.

In the US, we forecast a total of 45.2 million subscribers at the end of 2015, slightly ahead of Netflix’s latest guidance of 44.8 million. Notably, Netflix has now revealed a slightly higher number of free users than expected (at 1.46 million, compared with 1.03 million).

Internationally, we had projected Netflix’s total subscriber base at 26.6 million for the end of this year, compared with Netflix’s latest year-end estimate of 29.4 million. Again, Netflix’s latest guidance indicates the company has a higher number of free users internationally than was initially expected –at 2.44 million versus our projected 1.50 million.

Our stand-alone Netflix SVOD report is scheduled to be updated in 1Q16, as and when Netflix has released its full-year results.

In light of Netflix’s commitment to reach global coverage by end of 2016, at this time we will also be adding any new markets that have been officially confirmed to our Netflix forecasts. Hong Kong, Taiwan, and Singapore have all been officially confirmed by Netflix so far, while a number of other markets are rumored to be at the planning stage – these include Iceland, Czech Republic, Poland, Greece, South Africa, and Cambodia – and they will also be added to our coverage if and when officially confirmed by the company.

Appendix

Further reading

SVOD Service Provider Analysis: Netflix, ME0003-000582 (August 2015)

SVOD Service Provider Market Share Analysis: Americas, ME0003-000584 (August 2015)

SVOD Service Provider Market Share Analysis: Europe, ME0003-000585 (August 2015)

“Netflix stakes out Asian foundation”, ME0003-000581 (August 2015)

Author

Tony Gunnarsson, Senior Analyst, TV

tony.gunnarsson@ovum.com

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