Netflix had a great 2020. But 2021 could be rough

Hollywood has had a disastrous 2020 with th...

Posted: Oct 19, 2020 4:14 AM

Hollywood has had a disastrous 2020 with the coronavirus pandemic leaving the entertainment industry reeling. But Hollywood's loss is Netflix's gain.

Netflix thrived in 2020 as people were stuck at home during the global health crisis. The company posted colossal subscriber gains over the past two quarters, which helped drive its stock up nearly 70% this year.

Now, investors are eager to learn whether Netflix can take that momentum into next year.

The company will report its third-quarter earnings after the bell on Tuesday. Wall Street will keep its eye on subscriber growth (as is always the case with Netflix). Still, a lot of attention will focus on what the company has to say about next quarter, and next year, according to Bernie McTernan, a senior analyst at Rosenblatt Securities.

Netflix's subscriber forecast of 2.5 million in the third quarter is a "conservative number" that the company should exceed, McTernan believes. However, it could be an indicator that next year may be much leaner than 2020.

"We think that in 2021, subscriber growth is going to be slowing substantially," he told CNN Business. "We think that the outlook for '21 will be more challenging for Netflix."

McTernan, who is more bearish on Netflix than most other investors, added that he's curious about whether the company will raise prices next year — a move that could lead customers to cancel the service.

"We did a streaming video survey, and a substantial amount of respondents indicated that they would cancel Netflix or reduce the number of months that they subscribed to Netflix given a one or two dollar price increase," he said.

Another concern for the streamer may be increased competition next year.

Heading into 2020, Netflix was king of the streaming world. New services like Disney+ were in their infancy, and others like Peacock and HBO Max didn't exist yet. (WarnerMedia is the parent company of HBO Max and CNN.)

2021 could be a different story. For example, Disney has seen its media empire ravaged by coronavirus with its movies delayed, productions stalled, and its parks closed for months. Yet one division of Disney took a giant leap forward this year: streaming.

Disney+, the company's nascent streaming service, has brought in more than 60 million subscribers in less than a year. That put the service's growth way ahead of schedule since the company told investors last year that it projected Disney+ would have 60 million to 90 million global subscribers by 2024.

Because of Disney+'s success, the company announced a significant reorganization of its media and entertainment business last week to "further accelerate" its streaming strategy.

"The reorganization is really interesting, and it speaks to the company's focus on streaming," McTernan said. "Netflix just hasn't faced this kind of global competition before. The easy days of no competition are over for it."

Although Netflix may have a leaner 2021, it's hardly doomed.

If 2020 has proved anything, it's that streaming is here to stay. That puts Netflix in an excellent position considering that it has a massive head start on its rivals and has become synonymous with streaming itself.

"The bright side is that streaming usage has accelerated during the pandemic, and Netflix has cemented itself as a global leader," McTernan said. "I think it's a great company, but I think it's a tough stock."

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 174501

Reported Deaths: 2460
CountyCasesDeaths
Multnomah34800568
Washington23412229
Marion20116299
Clackamas15311204
Lane11554144
Jackson9904127
Umatilla796883
Deschutes708272
Linn414263
Yamhill408775
Klamath345259
Polk342952
Malheur342758
Josephine305462
Douglas304365
Benton273218
Jefferson206432
Coos196831
Columbia153826
Union141124
Lincoln129820
Wasco128928
Hood River112429
Morrow107915
Clatsop8918
Crook87819
Baker85614
Curry5939
Tillamook5803
Lake4137
Grant4064
Harney3056
Wallowa1575
Sherman570
Gilliam561
Wheeler251
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Cases: 3716579

Reported Deaths: 60994
CountyCasesDeaths
Los Angeles122864123628
Riverside2972154525
San Bernardino2945774550
San Diego2748113674
Orange2688694891
Santa Clara1169712013
Kern1078251322
Sacramento1010581646
Fresno1005001643
Alameda852561477
Ventura802301000
San Joaquin714311334
Contra Costa66927782
Stanislaus603831028
Tulare49383830
Monterey43267357
San Mateo41107560
San Francisco35993517
Santa Barbara33863446
Solano31875239
Merced31196452
Sonoma29679311
Imperial27962719
Kings22766245
Placer21751283
San Luis Obispo20917256
Madera16250239
Santa Cruz15554204
Marin13860226
Yolo13559199
Shasta11677217
Butte11549196
El Dorado9719109
Napa965479
Sutter9268109
Yuba609844
San Benito598263
Lassen566924
Tehama543056
Nevada444775
Tuolumne406664
Mendocino398747
Amador362151
Humboldt358737
Lake340643
Glenn235525
Colusa219816
Calaveras205551
Siskiyou194021
Inyo141738
Del Norte12747
Mono12734
Plumas6906
Modoc4884
Mariposa4247
Trinity3985
Sierra1100
Alpine880
Unassigned330
Medford
Clear
85° wxIcon
Hi: 82° Lo: 41°
Feels Like: 82°
Brookings
Partly Cloudy
49° wxIcon
Hi: 70° Lo: 47°
Feels Like: 47°
Medford
Clear
85° wxIcon
Hi: 58° Lo: 30°
Feels Like: 82°
Medford
Partly Cloudy
85° wxIcon
Hi: 84° Lo: 39°
Feels Like: 82°
Klamath Falls
Clear
73° wxIcon
Hi: 70° Lo: 33°
Feels Like: 73°
Very warm Sunday
KDRV Radar
KDRV Fire Danger
KDRV Weather Cam

Community Events