On its third-quarter earnings call, Netflix executives shrugged off incoming competition from Disney (DIS - Get Report) , Apple (AAPL - Get Report) and others, suggesting that a rising tide lifts all boats in the growing market for on-demand entertainment. Netflix shares spiked 10% in after-hours trading on Wednesday.
For the third quarter, Netflix posted better-than-expected revenue and a slight miss on new subscribers, also pledging to disclose regional revenue and membership in all quarters going forward. Still, its fourth-quarter guidance was lighter than some would have hoped: It forecast 7.6 million total paid net additional subscribers, well below consensus estimates of 9.48 million paid net adds.
Asked several times about the impact of competitors, Netflix management continued the high-minded tack it has taken for the past several quarters regarding potential rivals.
"All of us are competing with linear TV," said Netflix CEO Reed Hastings, also praising Apple and Disney as competitors.
"From when we began in streaming, Hulu and YouTube and Amazon Prime were all in the market; four of us have been competing heavily, including with linear TV, for the past 12 years," Hastings added. "We see both Apple and Disney launching in the same week after 12 years of not being in the market. Fundamentally, it's more of the same."
Nonetheless, Netflix did concede that new competitors going live in November were a factor in the fourth-quarter outlook it provided to investors. Disney+ is slated to launch on Nov. 12, while Apple's TV+ will go live Nov. 1.
"Obviously a few new competitors are launching in the near term, and we factor that in as well...we expect there to be some curiosity about the new offerings," added Netflix CFO Spencer Neumann. The company characterized the competition as a headwind in its shareholder letter, and also said that the impact of recent price increases could continue to weigh on new memberships.
Notably, both Disney's and Apple's offerings are priced well below Netflix's $13 monthly fee for its most popular standard plan -- Disney+ will cost $7 per month, while Apple TV+ will cost $5 per month plus a one-year free trial with the purchase of an Apple device.
But Greg Peters, Netflix's chief product officer, said the pricing of competing services isn't a "significant factor" for Netflix's ability to further raise prices in the future.
"The services and the content are highly differentiated," he said. "We let our subscribers tell us where that right price should be."
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