Netflix: We Only Account for 2% of Global Downstream Mobile Internet Traffic
Addressing what was sure to be an elephant in the room during Netflix’s Q1 investor call later in the day, Netflix CEO Reed Hastings used the streaming company’s pre-call quarterly shareholder letter to explain why he thinks the global OTT market is big enough for Apple, Disney and Netflix.
“We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive and because of the differing nature of our content offerings,” Hastings wrote. “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 U.S. cable networks collectively grew for years as viewing shifted from broadcast networks during the 1980s and 1990s).
RELATED: Netflix Subscribers Rise to 149M in Q1
Hastings tried to make the case that Netflix only satisfies a small portion of global demand at this point for “great TV and movies.” To bolster his point, he noted that Netflix only accounts for 10% of U.S. TV usage. He also pointed to Sandvine data showing that Netflix only consumes around 2.4% of global downstream mobile internet data.
Beyond the mere mobile internet, Sandvine also said that Netflix is the No. 1 internet application globally and chews up around 15% of global traffic.
Netflix stock shrunk just under 3% in after-hours trading following the late-afternoon first-quarter earnings report from Los Gatos, Calif., on Tuesday.
RELATED: Fitch Calls Netflix's Sub Growth Momentum a Concern
Notably, U.S. subscriber growth slowed to 1.7 million new users in Q1 compared to 2.3 million in the first quarter of 2018. However, Netflix instituted across-the-board price increases in the U.S. and several other markets in Q1.
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
By Kent Gibbons