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Content Canada 2019

Netflix nears 140 million subscribers

Netflix’s You drew an estimated 40 million viewers in the three weeks since its debut

US streamer Netflix grew its subscriber base by 8.8 million users in the fourth quarter of 2018 to reach 139 million global paying members, but revenues were lower than anticipated.

In its Q4 results, the SVoD service went from 130.42 million subscribers to 139.26 million, 1.2 million more than the estimate made in the firm’s Q3 results. Overall, paid memberships grew 26% year-on-year for the quarter and Netflix gained 29 million subscribers in 2018, adding to a total that stood at 110.64 million in 2017.

Again, it was its international gains that boosted the streamer most significantly, with Netflix adding 7.3 million such subscribers to hit 80.8 million non-US subs. Domestic subs were up 1.5 million to reach 58.5 million, nearing the lower limit of the saturation point of 60 to 90 million US members that Netflix previously set itself.

Revenues hit US$4.19bn, up from US$3.99bn and fractionally lower than the streamer’s forecast, although annual profits were up US$4.1bn from US$11.7bn to US$15.8bn, with operating profits reaching US$1.6bn. Free cash flow dropped to -US$1.3bn, from -US$859bn in Q3, although total free cash flow for the year was closer to Netflix’s estimate of -US$3bn than expectations of -US$4bn.

The streamer’s share price fell 2.8% after the results were announced, with some investors doubting whether the level of debt being taken on to finance its content mission was justified by the latest figures.

Reed Hastings

Meanwhile, Netflix’s Q4 shareholder letter was notable for its inclusion of audience figures for some of its new content. The SVoD service has been extremely guarded about such details in the past.

Sandra Bullock-fronted original film Bird Box was watched by 80 million households in its first month, while Elite, one of its Spanish original series, was viewed by 20 million member households in its first month and psychological thriller series You was viewed by an estimated 40 million in its first three weeks on the platform.

The figures will have pleased Netflix, especially after the firm announced it was raising its subscription fees in the US earlier this week. The 18% hike, its biggest to date, was viewed by some as a response to the new competition entering the OTT market this year, namely from big players such as Disney and AT&T.

However, CEO Reed Hasting played down concerns about competition, claiming Netflix was competing with video games such as Fortnite as much as it was Disney or HBO, and that its 10% share of the US entertainment market was a “great mark for us.”

“Just to point out how large a market that is: about a billion hours a day enjoying television, gaming platforms, linear, DVD, Netflix, everything. We’re running about 10% of that. It’s just an incredibly large and fragmented market,” he said.

“We compete so broadly with all these different providers that any one provider entering only makes a difference on the margin. That’s why we don’t get so focused on any one competitor. Our best way to win more time is by having the best experiences.”

In related news, Netflix has renewed Golden Globe-winning comedy The Kominsky Method for a second season. The series stars Michael Douglas and Alan Arkin as an ageing actor and his agent living out their later years in LA and dodging life’s curveballs.



Content Canada 2019
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