AMERICAN streaming service Netflix reports its membership grew by 20% in 2019 with its fourth quarter earnings growing by 31% year-on-year on the back of viewership of its original series such as The Witcher and You.
Membership in the Asia Pacific region grew by 1.75 million in the fourth quarter, bringing the total to 16.23 million. The company said in a release that this is the “highest growth quarter of the year.”
In all, Netflix said that 95% of its membership growth came from countries outside the US.
Total membership is currently at 167 million.
Fourth quarter revenues came in at $5.5 billion with operating income up 62% to $2.6 billion.
The growth comes despite the introduction of the Walt Disney Company’s own streaming service Disney+ and Apple’s Apple TV late last year, the company said.
“Netflix has an enormous opportunity ahead as audiences shift from linear TV to internet entertainment. New competing services will accelerate the shift from linear to on-demand — just like when audiences moved from broadcast to cable,” said the release.
Growth outside the US may be optimistic but back home Netflix may be facing its toughest year yet with the US and Canada market bringing in only 3 million new members in 2019, lower than the 9 million it brought in the year before.
The company said the slowdown is due to price hikes and increasing competition.
“We are working hard to improve our service to combat these factors,” Netflix said in a letter to shareholders as quoted by Bloomberg.
2020 PLANS
This year, Netflix is planning on “investing heavily to expand the variety and diversity of our shows,” said the release.
The company is expected to release more than 100 seasons of local language programming in 2020.
In particular, the service is “investing heavily in Korean stories,” as “K-content is also popular globally,” and has inked deals with South Korean media companies, JTBC and CJ ENM’s Studio Dragon.
A Bloomberg report noted that the company is expected to increase spending by 20% to bring its programming budget to $12 billion on a profit-and-loss basis.
“These deals will enable us to bring more K-dramas to fans all over the world,” the company said.
Aside from producing more original content, Netflix said that it is currently experimenting with pricing plans in Asia as it has started rolling out in 2019 mobile-only plans in India, Malaysia, and Indonesia.
“We expect the mobile-only plan to be revenue-positive which will allow us to further invest in content to be enjoyed by our members,” Netflix said.
“After several years of unchecked dominance in the US streaming video industry, Netflix faces high-profile new streaming rivals. Yet the breadth of its content and a compelling value proposition will make it hard for new entrants like Disney+ to unseat the company,” Geetha Ranganathan, a Bloomberg intelligence analyst, said in the Bloomberg report.
POPULAR CONTENT
The service noted in particular that the fourth quarter content slate “was strong” with the second season of thriller You netting an audience of 54 million and The Witcher drawing in 76 million, making it “the biggest first season of a series yet,” a company release said.
(Netflix counts views by number of accounts choosing to watch at least two minutes of a series, movie, or special)
The Witcher is a fantasy drama series produced by Lauren Schmidt Hissrich based on the book series of the same name by Andrezj Sapkowski. The eight episode first season stars Henry Cavill in the lead role of Geralt of Rivia.
Other popular series in the fourth quarter were The Crown by Peter Morgan and Spanish crime drama Casa del Papel by Alex Pina.
Season three of The Crown was watched by more than 21 million people, up 40% from the last season.
Netflix films like Michael Bay’s 6 Underground and Martin Scorsese’s The Irishman were some of the most popular films in the service, having 83 million and 64 million views, respectively.
The Irishman was nominated for Best Picture and Best Director alongside eight other nominations at the 92nd Academy Awards scheduled in February. — Zsarlene B. Chua with a report from Bloomberg
