Earnings Watch: Netflix is about to pass yet another subscriber milestone
When Netflix Inc. reveals its subscriber additions Wednesday afternoon, it should pass a milestone: 150 million paying subscribers.
The streaming-video service is expected to cross that threshold when it reports second-quarter earnings, after ending the first quarter with 148.9 million. Netflix NFLX, -0.17% predicted that it would add 5 million paying subscribers in the second quarter, which would be its smallest increase since the first quarter of 2017; analysts on average expect a bit more, according to FactSet, predicting about 5.3 million subscriber additions, on average.
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Netflix first passed 100 million paying subscribers exactly two years ago, in the second quarter of 2017. The pace has quickened since then, as the company has continued to spread across the globe; Analysts currently expect Netflix to pass 200 million subscribers by the end of 2020.
International growth has been the biggest boost to subscription numbers. When Netflix surpassed 100 million subscribers, it was pretty evenly split between U.S. and international customers. When Netflix reports its subscriber total on Wednesday, it is expected that about 95 million, more than 60%, will be outside the U.S., and analysts predict that the 200 million mark will include more than 130 million foreign subscribers.
Domestic subscriber growth has slowed down, and faces a much tougher challenge in the months to come amid growing competition. Content producers planning their own streaming services are following The Walt Disney Co.’s DIS, -0.52% path and removing their content from Netflix to place on their own services.
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Netflix’s views on competition are changing, though. Expect Chief Executive Reed Hastings to discuss those views more in a post-earnings video interview that MarketWatch has called the worst show Netflix produces.
• Netflix officially kicks off tech’s earnings season, and will be joined by a tech company from a very different era, International Business Machines Inc. IBM, +0.15% IBM will report earnings after successfully completing the acquisition of Red Hat Inc. The combination of Big Blue and Red Hat is an effort to compete for hybrid-cloud customers, who want to leverage the public cloud and on-premises compute.
See also: What is IBM’s plan for Red Hat?
• Dow Jones Industrial Average DJIA, -0.09% components expected to report Wednesday: IBM
• S&P 500 index SPX, -0.34% components expected to report: 13, including Bank of America Corp. BAC, -0.79% and eBay Inc. EBAY, -0.87% .
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