Netflix holds its own in the streaming wars - for now

FILE - This Oct. 8, 2019, file photo shows the Netflix app on an iPhone in New York. Netflix reports financial results Tuesday, Jan. 21, 2020. (AP Photo/Jenny Kane, File)
FILE - This Oct. 8, 2019, file photo shows the Netflix app on an iPhone in New York. Netflix reports financial results Tuesday, Jan. 21, 2020. (AP Photo/Jenny Kane, File) (Copyright 2020 The Associated Press. All rights reserved.)

SAN FRANCISCO, Calif. – Netflix is holding its ground in the streaming wars, passing its first big test since Apple and Disney launched rival services.

The company added 8.8 million worldwide subscribers during its fourth quarter, surpassing expectations at a time when it faces heated competition.

Netflix had said it expected to add 7.6 million subscribers, and analysts thought the service would fare even better. The increase pales slightly next to the 8.9 million subscribers the service added in the fourth quarter of 2018.

The stock dropped about 2.5% immediately in after-hours trading, likely due to a cautious forecast for the first quarter. But shares rebounded and later traded up more than 2%.

The company — a pioneer in producing streaming media and binge-worthy shows — now boasts more than 167 million subscribers worldwide, bolstered by a list of well-received movies and shows released late last year. That includes the fantasy show “The Witcher” and Oscar nominees “The Irishman” and “Marriage Story.”

The boost helps reaffirm Netflix’s strong standing in the increasingly crowded world of video streaming. The fourth quarter was an important milestone for Netflix, as it was marked its first head-to-head competition with Apple’s $5-per-month streaming service and Disney’s instantly popular $7-a-month option.

Still, it’s unlikely to be a smooth road for Netflix. NBC, HBO and startup Quibi are all planning to launch new streaming services soon.

Two big questions loom: How much are consumers willing to pay for each video streaming option? And how many will they pay for before reaching subscription fatigue?