Netflix subscriber slip hints at ‘lumpy’ road ahead for streaming giant

Netflix subscriber slip hints at ‘lumpy’ road ahead for streaming giant
The Netflix logo is seen on their office in Hollywood, Los Angeles, California on July 16, 2018. (REUTERS/Lucy Nicholson)
Updated 17 July 2018

Netflix subscriber slip hints at ‘lumpy’ road ahead for streaming giant

Netflix subscriber slip hints at ‘lumpy’ road ahead for streaming giant
  • Shares of Netflix fell 13 percent on Tuesday after it reported a surprise shortfall in subscriber additions
  • While Wall Street remains overwhelmingly positive on Netflix and its role in video streaming globally, the numbers did raise question marks over future growth

CALIFORNIA: Shares of Netflix fell 13 percent on Tuesday after it reported a surprise shortfall in subscriber additions for a second quarter marked by the lack of a blockbuster new show and the FIFA World Cup.
While Wall Street remains overwhelmingly positive on Netflix and its role in video streaming globally, the numbers did raise question marks over future growth and six brokerages cut their price targets on the company’s shares.
“The quarter is a reminder that Netflix’s cadence of net adds is not linear, but lumpy in nature,” said Justin Patterson, an analyst with Raymond James and Associates in San Francisco, while pointing to the absence of a new hit series as a driver.
“The company had lots of new content during the quarter; what it did not have was a major new breakout series.”
Riding on the success of its original shows such as “13 Reasons Why,” “House of Cards” and “Orange is the New Black,” Netflix had beaten subscriber growth expectations in seven out of last 10 quarters.
That has driven a doubling of its share price in the last year, raising its value to within sight of $200 billion as of Monday’s close.
What is not clear is where the hurdles to that unbroken run of growth will come from, be it stronger competition from Amazon Prime or the changes in control of major film and TV franchises heralded by Walt Disney Co. and Comcast Corp’s bid for Twenty-First Century Fox Inc. .
Netflix added 5.15 million customers from April through June, 1 million fewer than forecasts from Thomson Reuters I/B/E/S and down from 7.41 million in the first quarter.
“While subscriber weakness is obviously an issue, the company’s inability to explain it satisfactorily could weigh on the stock over the coming quarter,” Barclays analysts said.
Still, there was only one outright cut in a trading recommendation on the stock — by Deutsche Bank to hold from buy — and two others actually upped their recommendations. At least three raised their price targets.
“Netflix has faced hurdles before and this Q2 report won’t be the last,” PiperJaffray analyst Michael Olson wrote.
“The long term potential is too great for us to suggest anything other than buying (the shares),” he added, listing a just 15 percent share of Internet households outside China as a huge potential market.
Olson and several others pointed to the World Cup as a possible distraction in the quarter that might have encouraged subscribers to hold off or freeze subscriptions for a month.
The 2018 soccer tournament that is among the most-watched TV events started on June 14 and has just finished.
“Netflix is in a business that varies by quarter anyway and perhaps the company shouldn’t have gotten too enamored with the crazy success of the last two quarters which was invigorating but not sustainable,” Forrester analyst James McQuivey said.


Twitter faces a rocky path under Turkey’s new social media law

Twitter faces a rocky path under Turkey’s new social media law
In this file photo taken on October 26, 2020 shows the logo of US social network Twitter displayed on the screen of a smartphone and a tablet in Toulouse, southern France. (AFP)
Updated 19 January 2021

Twitter faces a rocky path under Turkey’s new social media law

Twitter faces a rocky path under Turkey’s new social media law
  • YouTube, Twitter and Facebook have faced fines in previous months for not complying with the new law

ANKARA: Turkey’s advertising ban for social media platforms with more than 1 million daily users that have failed to establish a local representative office in the country came into force on Tuesday.

As of Jan. 19, nobody will be allowed to advertise on Twitter, its live-streaming app Periscope and image-sharing app Pinterest, leading to a substantial loss of revenue for these platforms.

Their bandwidth will also be reduced by half in April and by 90 percent in May, leading ultimately to a total blocking of access.

On Monday, Facebook announced that it would appoint a local representative in Turkey, in compliance with the country's draconian social media law that has been criticized as a powerful instrument of state censorship of online content.

Facebook said that it might withdraw its local representative if he or she faced political pressure.

Last month, YouTube decided to abide by the new law that gives Turkish authorities the opportunity to remove so-called “sensitive” content from social media platforms rather than blocking access.

YouTube, Twitter and Facebook have faced fines in previous months for not complying with the new law.

“Advertising on Twitter hasn’t been very popular among advertisers. However, especially for NGOs and political parties, advertising on Twitter was thought to be a meaningful device,” Sarphan Uzunoglu, a digital communications expert from Istanbul Bilgi University, told Arab News.

Uzunoglu thinks that rather than classical market actors, governmental and non-governmental actors will be affected by this new situation while campaigning.

The Turkish government considers foreign social media platforms bypassing local oversight an example of “digital fascism.”

The new social media law will expose users to the risk of arbitrary arrest and prosecution over their online posting as their private data can be handed over to Turkish authorities on request.

Right defenders have asked all international social media companies that established a local representative office in Turkey to tell their users how their right to freedom of expression will be guaranteed.

Compared to other platforms that complied with the new law, Twitter’s share in the advertising market is limited, Uzunoglu said.

“However, Twitter is the most political platform among them and it is intensely used by journalists who are under the government’s oppression on a regular basis. So Twitter, in the end, is a battlefield. I find their decision to resist for now so valuable,” he said.

In Turkey, where the mainstream media is almost completely owned by pro-government conglomerates, social media platforms have become a frequent source of information for citizens, who also share their views on political issues.

According to the latest Dimensions of Polarization in Turkey 2020 Survey conducted by the German Marshall Fund of the United States and Istanbul Bilgi University, online news portals (57 percent), as well as Facebook and Twitter (36 percent), have turned into the primary information sources for Turks.

“This law and its application with these fines and bans are problematic,” Kemal Kumkumoglu, a lawyer specialized in digital technologies, told Arab News.

“First of all, this law does not provide a democratic aim or proportionate measures. For example, the provision which allows removing user content could be considered an Orwellian tool since it offers government (a way) to create a digital environment free from discussions or criticisms about the government actors or institutions,” he said.

On the other hand, for Kumkumoglu, although it is a legitimate expectation on the government’s side to appoint local representatives for social media platforms for law enforcement and taxation purposes, the path that the government has been following endangers the fundamental rights of citizens.

“This commercial ban and the potential cut on bandwidth will affect the freedom of expression and freedom of trade of the large portion of the population who enjoy these rights mainly with these platforms,” he said.

Twitter released its Transparency Report in January, in which Turkey was ranked as the world leader in the categories of combined requests, court orders and other legal demands, accounts specified for closure, and accounts and tweets withheld.

Kumkumoglu considers the social media law and its gradual implementation on social media platforms a “double-edged sword.”

“It is true that the citizens should not be left alone concerning the digital problems they encounter. However, pushing citizens into social media platforms that are put under the constant pressure of huge fines is not an ideal solution. The rule of law requires addressing such issues with a systematic and democratic approach, which is unfortunately not the case in Turkey.”

On tweets withheld by Twitter, Turkey still tops the list with 12,135 tweets out of 28,542 tweets withheld in 2020. This means almost 42 percent of the tweets withheld globally by Twitter came from Turkey last year.