Streaming giant, Netflix, said it will now have to do more to increase its revenue as competition gets stiffer from the likes of YouTube, TikTok, and gaming platforms.
The company said it is now competing for consumers with these two platforms, aside from its direct streaming competitors.
The situation notwithstanding, Netflix is hoping to rake in more revenue from its streaming business this year as it projects a 4% revenue growth for Q1 2023.
Netflix in a letter to its shareholders against the backdrop of its Q4 2022 financial results, said consumers now have a vast number of entertainment choices, which makes the market more competitive. It, however, noted that it is competing from the position of strength in terms of revenue and streaming profit.
Big market: Despite the increase in competition, Netflix believes the market is big enough for it to meet up with its revenue targets. It said:
“Beyond our direct streaming competitors, we also vie for consumers’ time against linear TV, YouTube, short-form entertainment like TikTok, and gaming, to name just a few. The silver lining is that the market for entertainment is huge and Netflix is still very small by comparison.
“It’s not easy to build a large and profitable streaming business. But we’re competing from a position of strength, as we lead the industry in terms of engagement, revenue, and streaming profit. As a pure-play streaming company, we’re also not anchored to shrinking legacy business models, like traditional entertainment firms, allowing us to lean hard into the big growth opportunity ahead of us.”
Growth strategy: To shore up its revenue for this year, Netflix said it will later in Q1 start rolling out ‘paid sharing’ more broadly. The company announced paid sharing late last year, which ensures that users sharing their passwords are made to pay more, but not in all countries.
“So we’ve worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account. As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with. As is the case today, all members will be able to watch while travelling, whether on a TV or mobile device,” the company stated.