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Analyst Says Netflix to Add 20 Million Subs in 2016

13 Apr, 2016 By: Erik Gruenwedel

BTIG’s Richard Greenfield believes SVOD pioneer can reach 150 million subs in four years

Expect Netflix to add 20 million global streaming subscribers this year, says BTIG Research analyst Richard Greenfield, who previously projected 18.7 million sub additions in 2016.

Greenfield, a longtime Netflix bull and frequent moderator of the streaming service’s fiscal webcasts, attributed the increased sub growth to continued global demand for over-the-top video combined with Netflix’s benchmark user-interface, technology prowess and diverse programming.

Indeed, the analyst contends Netflix could reach 150 million subs provided the service successfully launches in China. That tally is 25 million less than projections from British-based ARK Investment Management. In the meantime, Greenfield is shooting for 127 million subs in two years. Netflix, which reports first-quarter fiscal results April 18, ended 2015 with 75 million subs.

The analyst believes Netflix can stanch the international fiscal hemorrhaging from a previous projected loss of $543 million to a revised loss of $354 million.

“We believe the cadence and consumer appeal of Netflix’s original/licensed content is leading to greater-than-expected global net subscriber additions,” he wrote in an April 13 blog post.

At the same time, don’t expect domestic sub growth to accelerate. Greenfield downsized previous projected additions by 300,000 to 5 million, while increasing international additions to 15 million from 11.7 million.

The rosy outlook for Netflix comes despite ongoing industry concern regarding Netflix’s outsized clout and global reach. Time Warner CEO Jeff Bewkes last year mandated his company’s business units — notably Warner Bros., TNT and HBO — delay up to a year licensing new content to SVOD services such as Netflix.

Bewkes, along with Rupert Murdoch at 21st Century Fox, would like to level the SVOD playing field by introducing proprietary streaming services and enhancing Hulu Plus — which Fox co-owns — and, to a lesser extent, Amazon Prime Video. HBO licenses all content older than three seasons to Prime Video on a non-exclusive basis.

Greenfield isn’t concerned, saying he doubts studios will be able to “starve Netflix of content” anytime soon. Instead, the analyst believes studios and content holders will more inclined to license programming to SVOD services as the traditional pay-TV ecosystem shrinks.

“As the bundle comes under increasing pressure, it frees up more and more consumer dollars to spend on Netflix and other SVOD services,” he wrote.

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