High costs and more and more competition: The streaming market is competitive and next year could be problematic for the industry giant Netflix.

Streaming is becoming increasingly popular , but that doesn't necessarily make Netflix stronger: The streaming giant Netflix is to lose four million subscribers in the USA in 2020. This is predicted by the US investment bank Needham , which has also downgraded the media company's rating. The bank bases the gloomy forecast primarily on the relatively high price of the portal and the ever-increasing number of competing providers.

Netflix needs advertising

“Netflix needs a second, cheaper service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock,” writes Needham analyst Laura Martin. Netflix's balance sheet would not be able to withstand lower revenues, which is why the company would have to change something in its business model.

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Needham sees it as a mistake for the portal to forego advertising. Because the monthly fee for the service remains high, this would lead to a large loss of subscribers. To counteract this, Netflix should introduce an alternative offer in which the fees are lower and users see advertisements on the platform. According to a May 2019 survey by market research firm Splendig Research, audiences are not averse to this concept.

“Weak cost structure”

At the end of the third quarter of 2019, the streaming giant said it had just over 60 million subscribers in the US. However, Needham is not the only financial institution that has downgraded the streaming company. Citigroup cut Netflix's rating last week. The reason for this is the strong competition and the company's “weak cost structure”.

via Pressetext.com


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