Business News

CCTV Script 18/04/18

— This is the script of CNBC's news report for China's CCTV on April 18, Wednesday.

It was a boom year for Netflix according to the latest released earnings. Netflix's revenue reached 3.7 billion USD in the first quarter and increased 7.41 million new subscribers, topping the growth record of Netflix, which is beyond the market's expectation.

New subscribers during the last quarter included 1.96 million new US users and the total number of user reached 0.125 billion that is far beyond the Wall Street's estimates, thus, the investors have confidence to the Netflix's potential in the US and other overseas market.

In the overnight trade of US stock, Netflix stock price soared nearly 9.2%, closed at 336.06 USD/share, and had 0.5% increase in the after-hours trade.

The market focus on how can Netflix keeps the good momentum and how to be invincible in the fierce competition of content market. The latest earnings tell that Netflix is still heavily dependent on international market and drive user growth by original content. Create original content and keep competitiveness on innovation are Netflix's current strategy.

Currently, Netflix has taken original content in 17 countries, and the content "localization" will continue to attract the interest of international users, says the Chief Content Officer. Netflix supports multi-language subtitles, which makes the foreign language content also popular in the US. And English content is still hot in international market. As for the future strategy, Netflix will cooperate with different cable providers in the US, including Comcast and T-Mobile, to keep their customers and keep them from. Meanwhile, Netflix will continue to vigorously develop the mobile APP and obtain the content authorization in China market that is a big cake for Netflix.

But Netflix is facing challenge. In order to create more original content, Netflix's cash flow is negative and had 0.287 billion USD debt in the last quarter. It's estimated that Netflix will continue to invest 7.5 to 8 billion USD on content and 2 billion USD on marketing. Adequate cash support will be very important, cause Netflix burn money even faster than Tesla

Netflix has to compete with Amazon and Disney on video service. Analyze expected that Amazon will invest 5 billion USD on content this year, compared to YouTube and other video platform, Netflix still has a long way to go on user base.

However, from Netflix's outlook, it may continue the strong performance; the expected revenue of the 2nd quarter is 3.93 billion USD. We will keep an eye on this issue.