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Analysts express mixed views on Netflix Q2 growth

Many of the analysts believe India could be strength for the company in Q2 growth.

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MUMBAI: Given the ferocity of Netflix's growth, a Forbes report had predicted its impressive Q1 2018 result to continue in Q2 as well. In first quarter 2018, Netflix exceeded user addition forecasts along with a 43 per cent year over year growth. Forbes predicted growth in revenue and subscribers in Q2 too. In addition to that, the report says it could report revenues of around $3.9 billion. The result for Q2 is supposed to release on 16 July.

The previous quarter’s growth was fuelled by continued strong acquisition trends across the globe. Netflix attributed it to “the growing breadth of our content and the worldwide adoption of internet entertainment.” The international subscriber base of the over-the-top (OTT) platform increased at a rapid pace (42 per cent y-o-y).

Repeating the same trend in Q2, the report anticipates that the total subscriber base for both international and US streaming services could grow to over 130 million during the quarter. Netflix itself expects 6.2 million global net addition in Q2.On the contrary, Deutsche Bank told the OTT platform could miss Wall Street’s second-quarter subscriber expectations next week. “We don't see 2Q earnings as a positive catalyst for the stock; in fact, we see some near term downside risk,” said analyst Bryan Kraft as quoted by CNBC.  Following the prediction, company's stock fell more than four percent Friday.

Despite that, Swinburne, a strong believer in Netflix’s growth, thinks Netflix is increasing its “competitive moat” against competitors. “On top of the ability to use data to improve its programming and marketing decisions, Netflix now brings to market a content offering that boasts $16 billion in net content value,” Swinburne wrote as quoted by Variety.

“As a result, other than live sports and news, we see the potential for Netflix to not just take share from other networks or channels, but to represent ‘TV’ for many households,” it added.

Many of the analysts believe India could be strength for the company in Q2 growth. Netflix is scaling up its business in India and planning more original content after already releasing Sacred Games. However, in the Indian market, Netflix has to face stiff competition from local platforms like Hotstar, Voot, ALTBalaji, along with tough challenge from its international rival Amazon.

With its $8 billion expense plan for content, it is definitely outperforming Hulu, Amazon in the domestic market.

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