Streaming services took off because people were exhausted of paying outrageously high prices for cable packages they only used part of and for the occasional night at the movies.
The streaming giant posted revenue of US$4.19 billion in the period, compared with a US$4.21 billion projection from analysts. Also missed the forecasts for sales and profit in the first quarter of the expectations.
"Investors were hoping for a robust outlook after the video streaming pioneer, which boasts of popular shows such as "The Crown" and Black Mirror", raised prices for most USA subscribers earlier this week. It expects to add another 8.9 million subscribers in the quarter that ends in March, the vast majority of which are expected to come from strong growth in its worldwide markets. Netflix has already said it expects to add 8.9 million more subscribers in Q1 2019. The TV streaming giant revealed last night that it signed up nearly 9 million new subscribers in the final three months of 2018, a record number.
"Management is taking a cautious tone", said Geetha Ranganathan, an analyst at Bloomberg Intelligence. This week, Netflix introduced price increases, and some of its subscribers have had enough.
That figure is 115 times Netflix's peak year of cash generation in its history.
"There's a billion hours of television content being consumed today - we're winning about 10 percent of it", Chief Executive Officer Reed Hastings said in an online Q&A. Its focus is on growing usage by improving the overall viewing experience for customers.
Netflix, for its part, noted that since launching its unscripted strategy two years ago, Netflix Originals like Tidying Up with Marie Kondo (pictured) account for a substantial chunk of unscripted view share on the platform. The company also called out the successes of content overseas from Turkey and the United Kingdom.
In a statement, Netflix said its free cash flow deficit increased to 1.32 billion dollars in the fourth quarter, bringing its cash burn up to 3 billion dollars for the full year in 2018.
Carrie Mudd, president of Toronto-based Peacock Alley Entertainment Inc., which makes Travelers, said her company acquired the footage from a stock image vendor called Pond 5.
The slower-than-expected growth will put more of the spotlight on a recent price increase.
"Given strong net adds growth trends in 4Q and 1Q guidance for continuing subscriber growth with higher pricing, NFLX should alleviate most investor concerns around its growth trajectory..." The company believes that global markets will one day account for as much as 90 per cent of its customer base.
During the fourth quarter, Netflix added 8.8 million paid memberships, 1.5 million in the United States and 7.3 million internationally. The service still has plenty of second-run programs, he said, but the momentum has shifted toward its original fare.
"We sincerely apologize and had no intention to dishonor the tragic events of 2013", Mudd said. For example, film "Bird Box" will be watched "by over 80 million member households" in its first four weeks on Netflix, according to the company's estimates. But estimates were for $4.21 billion in revenue.
Q4 earnings per share (GAAP): $0.30, versus Wall Street estimates $0.24 and Netflix's forecast of $0.23.
Netflix has three readouts that warrants an incrementally bullish stance on the stock, Patterson said in a note.