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Netflix (NFLX) Cuts Stream Quality in Israel on Coronavirus Woes

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Netflix NFLX will reduce the bitrate of its streams for 30 days, in an attempt to lower its network traffic by 25% in Israel, per a Reuters report. The announcement comes after the Ministry of Communications urged the streaming giant to help reduce load on the country’s infrastructure.

Internet traffic is increasing as more and more people are spending time at home, in line with social-distancing guidelines during the coronavirus pandemic.

Internet service providers reported a 20%-30% rise in use in Israel on average since the outbreak began, per the country’s Ministry Of Communication’s report.

The streaming giant agreed to comply with the new measure set to be implemented gradually over the week. Netflix videos in standard definition uses 1 GB of data per hour, while HD videos use 3 GB data per hour.

Last week, Netflix, YouTube, Disney DIS, Apple AAPL and Amazon AMZN had announced that they will downgrade their video quality to ease the pressure on the Internet and to facilitate work-from-home and online learning during the period of confinement in European countries to combat the spread of coronavirus (COVID-19).

Solid International Content to Counter Competition

Netflix’s expanding international content portfolio is not only expected to contribute to subscriber addition but also offset stiff competition from the likes of Disney, Apple and Amazon.

Notably, Disney+ has gained 28.6 million subscribers since its November 2019 launch. It is predicted to hit 126 million subscribers worldwide by 2025.

Netflix, Inc. Price and Consensus

Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

Moreover, Apple’s aggressive pricing strategy of $4.99 per month for Apple TV+ has intensified competition for Netflix in the streaming market.

Nonetheless, Netflix is well poised to make the most of this surge in consumption owing to its diversified content portfolio, courtesy of heavy investments in production and distribution of localized, foreign-language content and an expanding international footprint.

The company is working on projects across Mexico, Spain, Italy, Germany, Brazil, France, Turkey and the entire Middle East to drive international subscriber growth. Notably, the company’s streaming service is available in 190 countries.

Markedly, the company generated $1.56 billion in revenues from its Europe, Middle-East and Asia (EMEA) segment in fourth-quarter 2019. Netflix reported 51.8 million paid subscribers in EMEA market at the end of 2019, representing 31% of its worldwide customer base.

Moreover, the streaming giant will invest around $17.3 billion this year in content, according to a Wall Street forecast, up from $15.3 billion in 2019, per a Variety report.

Last month, Netflix rolled out a new feature on its interface that will show the daily overall top-10 titles in a subscriber’s country, as well as the top 10 most popular series and films when users select TV shows or movies tabs.

Netflix currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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