Netflix holds its own in the streaming wars - for now

Netflix added 8.8 million worldwide subscribers during its fourth quarter. Photo / Bloomberg

Netflix added 8.8 million worldwide subscribers during its fourth quarter, surpassing expectations at a time when it faces heated competition from new streaming challengers such as Disney.

Netflix had said it expected to add 7.6 million subscribers, and analysts thought the service would fare even better. The increase pales slightly next to the 8.9 million subscribers the service added in the fourth quarter of 2018.

The stock dropped about 2.5 per cent in after-hours trading, likely due to a cautious forecast for its first quarter.

The company — a pioneer in producing streaming media and binge-worthy shows — now boasts more than 167 million subscribers worldwide, bolstered by a list of well-received movies and shows released late last year including Oscar nominees "The Irishman" and "Marriage Story."

The boost helps reaffirm Netflix's strong standing in the increasingly crowded world of video streaming. The fourth quarter was an important milestone for Netflix, as it was marked its first head-to-head competition with Apple's US$5-per-month streaming service and Disney's instantly popular US$7-a-month option.

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Still, it's unlikely to be a smooth road for Netflix. NBC, HBO and startup Quibi are all planning to launch new streaming services soon.

Two big questions loom: How much are consumers willing to pay for each video streaming option, and how many will they pay for before reaching subscription fatigue?

Netflix's most popular plan costs US$13 a month, far more than Disney, Apple and Quibi. But it's comparable to Hulu and HBO Now, and boasts one of the largest libraries of TV shows and movies, not to mention regularly updated original shows.

In the U.S., Netflix added 420,000 subscribers, below its own estimates. Growth in its home country has been slowing in the last year, partly because most people in the U.S. who want Netflix already subscribe.

The company reported profit of US$587 million on revenue of US$5.47 billion, exceeding expectations.