Netflix’s global push needs a local touch | HT Tech

Netflix’s global push needs a local touch

The company, whose original shows include “Orange is the New Black” and “House of Cards”, is also facing increased competition in its home market from the likes of Amazon.com Inc and Hulu.

By:REUTERS
| Updated on: Apr 22 2016, 09:04 IST
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The company, whose original shows include “Orange is the New Black” and “House of Cards”, is also facing increased competition in its home market from the likes of Amazon.com Inc and Hulu.

Netflix is thinking global but needs to act more local to realize its full potential, analysts said after the company's subscriber forecasts came up short of expectations.

The company's high-flying stock, up by a third in the past 12 months, fell as much as 11.6 percent to $95.84 in early trading on Tuesday. That was the stock's biggest intraday drop in nearly eight months.

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The video streaming pioneer launched its service in almost every country in the world in January, further boosting investors' expectations about the company's growth prospects.

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However, the weak subscriber forecast underscores the troubles Netflix is grappling with as it adapts the service to different markets and cultures.

"We believe this highlights the increasing challenges facing the company as it expands into more non-English speaking countries and countries with more localized content," said Mizuho analyst Neil Doshi, who rates the stock "neutral."

Baird was the most bearish, cutting its target to $108 from $115. The median price target on the stock is $123.

J.P. Morgan Securities analysts were among those that said Netflix needed to add more languages and local content and payment options.

Pacific Crest lowered its 2016 global net subscriber addition forecast to 18.7 million from 21.5 million.

"The reductions reflect heightened seasonality and lower incremental adoption, as local content and marketing are being phased in more slowly than previously anticipated," Pacific Crest analyst Andy Hargreaves wrote in a note to clients.

The company, whose original shows include "Orange is the New Black" and "House of Cards", is also facing increased competition in its home market from the likes of Amazon.com Inc and Hulu.

Amazon announced on Monday it would offer its video streaming service as a standalone monthly subscription as it looks to drive membership in its Prime subscription service.

Wedbush analyst Michael Pachter, one of the few analysts with a "sell" or "underperform" rating on Netflix, said Amazon's move could spell trouble for the video streaming company.

"Amazon Video will up the ante for acquiring new content. This creates a double-whammy for Netflix—higher content spend and slowing subscriber growth," Pachter said.

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First Published Date: 21 Apr, 10:17 IST
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