Netflix subscriber forecast misses Wall Street estimate as market leader faces Disney

FILE PHOTO: The Netflix logo is shown in this illustration photograph in Encinitas, California October 14, 2014. REUTERS/Mike Blake/File Photo

(Reuters) – Netflix Inc missed Wall Street subscriber forecasts for the first quarter Tuesday, amid pressure from lower-cost services from Walt Disney Co and Apple Inc in the streaming video wars.

The streaming giant added more paying subscribers than Wall Street expected in the fourth quarter, beating international subscriber estimates but missing estimates for U.S. subscriber growth.

Netflix shares were up 1.5% in volatile after-hours trading on Tuesday.

The company acknowledged that competitive pressure and a recent price hike impacted its U.S. business, where subscriber growth fell short of analyst estimates.

Competition had a more muted impact on its viewership in Canada, Australia and the Netherlands, the company wrote in a letter to investors.

The Disney+ and Apple TV+ streaming services both launched in the United States in November. Disney+, which is also live in Canada, Australia and New Zealand, will launch in the UK, France, Germany, Italy, Ireland, Spain, Austria and Switzerland on March 24. Apple TV+ is available in over 100 countries and regions.

Netflix’s first-quarter forecast reflected the potential threat of that international expansion. The company said it expects to add 7 million subscribers globally in the first quarter, below analysts’ average of 8.82 million, according to IBES data from Refinitiv.

Netflix said it added 8.76 million paid global subscribers in the fourth quarter, boosted by strong releases that included a new season of royal drama “The Crown” and two films nominated for Best Picture Oscars. It beat the 7.6 million average expectation of analysts, according to IBES data from Refinitiv – the same growth Netflix forecast for the quarter.

The Disney+ service launched in the United States and Canada for $7 per month and $13 a month for a bundle with ESPN+ and Hulu; it reached 10 million sign-ups on its first day. Apple TV+ launched Nov. 1 for $5 per month and is free for one year with the purchase of some Apple devices: its performance has been harder to define. AT&T-owner WarnerMedia’s HBO Max will cost $15 per month when it launches in May.

Netflix is available in over 190 countries; its standard U.S. plan costs $13 per month.

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