I’m going to try and look at the bright side of Netflix’s disastrous subscriber growth in Q1.
Unfortunately, that bright side isn’t for Netflix (NASDAQ: NFLX), it’s for Roku (NASDAQ: ROKU)!
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Is Netflix’s loss Roku’s gain?
Let’s just get the ugly stuff out of the way; Netflix had a bad quarter in terms of subscriber growth, and that trend is set to continue. Its net subscriber additions came in at four million, well short of the more than six million predicted. To rub salt in investors’ wounds, management predicts that just one million new subscribers will be added in Q2 — its lowest forecast in years.
This is good news for Roku because now, Netflix is genuinely facing stiff competition in the form of Disney+, Apple TV+, HBO Max, etc. The trend in recent years has lent credence to the belief that more streaming options will mean more streamers. Analysts estimate that there are roughly 2.5 billion over-the-top (OTT) streaming service subscribers worldwide as of the end of 2020.
Considering the planet is rapidly approaching a population of 8 billion people and internet access is on the rise globally, it seems that OTT still has room to grow.
In the middle of all that sits brand-agnostic Roku and its 51 million subscribers as of the end of 2020 — up by 14 million in just one year. For the first time, Netflix’s dominance looks vulnerable, and with so many players in the game, Roku will lap up users who want to enjoy all of their services in one neat little package.
In fact, the loss of Netflix’s dominance is only good for streaming, and Roku stands to gain the most.
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