GLOBAL streaming service Netflix closed 2020 with an additional 37 million paying subscribers above company and analysts forecasts, with its executives reporting in the earnings report that the service is “very close to being sustainably free cash flow positive.”
After slowing down in the third quarter of 2020 by adding 2.2 million subscribers, lower than the company forecast of 2.7 million and significantly less than the 28 million subscribers that jumped aboard in the first half of 2020, Netflix bounced back in the fourth quarter by adding 8.5 million subscribers, successfully breaching the 200 million subscriber mark. Netflix subscribers currently sit at 203.66 million.
The rise in subscriber numbers bodes well for the service’s balance sheet as Netflix reported $25 billion in annual revenue (an increase of 24% year on year) and grew operating profit by 76% to $4.6 billion.
This means that Netflix may soon be cash flow positive and would no longer need to raise external funding for daily operations.
The Asia Pacific (APAC) region saw the second largest subscriber jump at 9.3 million (up 65% year on year) for the entire 2020, following the Europe, Middle East, and Africa (EMEA) region which saw 14.9 million new subscribers. South Korea and Japan in particular were mentioned in the earnings report as the two countries which reported significant subscriber growth.
In the earnings interview published on YouTube on Jan. 19, Netflix mentioned rival Disney+ and how its hugely successful year — onloading 87 million paying subscribers in its first year — gets them “fired up about increasing [their] membership [and] increasing [their] content budget,” in the words of Netflix co-CEO Reed Hastings.
“It’s super impressive what Disney has done. It’s an incredible execution for an incumbent to pivot and taking on an insurgent… and it shows that members are interested and willing to pay more for more content,” Mr. Hastings said.
The earnings report also mentioned other competitors, including the soon-to-launch Paramount+ in 2021 (from ViacomCBS) and existing streaming services AppleTV+, WarnerMedia’s HBO Max, and NBCUniversal’s Peacock.
“Our strategy is simple: if we can continue to improve Netflix every day to better delight our members, we can be their first choice for streaming entertainment. This past year is a testament to this approach,” the company said in the earnings report.
For 2021, Netflix expects the first quarter to see 6 million new subscribers, significantly lower than 2020’s first quarter which recorded 15.8 million new subscribers. The company said that the Q1 (first quater) 2020 numbers “included the impact of the initial COVID-19 lockdowns.”
WHAT PEOPLE WATCHED
In the fourth quarter of 2020, two live action series from Asia — Alice in Borderland from Japan and Sweet Home from Korea — collectively saw 30 million households watching and both titles appeared in Top 10 lists across Asia and countries outside the region including Germany and France.
This is said to be “a true testament to the fact that great stories made in Asia with Asian filmmakers and talent can cross borders and be watched and loved by the world,” according to a separate Netflix press release.
Meanwhile, the fourth season of the British royal family drama The Crown became the series’ biggest season so far, with the number of households watching the series reaching over 100 million since its launch in 2016.
With show production back up and running in most regions, Netflix reported that “over 500 titles” are currently in post-production or preparing to launch and that they plan to release “at least one new original film every week in 2021.”
Among the new shows that have already premiered and will soon premiere in the first quarter of 2021 are the third season of Cobra Kai, French series Lupin, To All the Boys I’ve Loved Before 3, Fate: The Winx Saga, Yes Day, Sky Rojo (from the creators of La Casa de Papel), and Space Sweepers. — Zsarlene B. Chua