Netflix caps off record year with 200 million subscribers

The Queen’s Gambit

Netflix has surpassed 200 million subscribers globally for the first time in its history and says it plans to continue to accelerate its original commissioning plans.

The streaming giant capped off 2020 with a total of 203.6 million paying users around the world, according to its Q4 results released yesterday.

The company surged in the first half of 2020 due to the impact of the Covid-19 pandemic, with its performance peaking in Q1 as it added 15.8 million subscribers. Q3 meanwhile was more muted, with a haul of 2.2 million subs – some 300,000 under the company’s guidance. Netflix returned to form in the final quarter of the year, however, adding 8.5 million subscribers.

Overall, the company added 37 million paid memberships in 2020, a record growth of 31% for the streamer. This translated to revenues of more than $24bn for the year, up 24% year-on-year. Netflix’s operating profit grew by 76% to $4.6bn.

Modest global growth expected

In its shareholder letter, Netflix described itself as “an increasingly global service” with 83% of its annual additions coming from outside of the US and Canada. EMEA accounted for 41% of Netflix’s full year paid net adds, while APAC added an additional 9.3 million subscribers.

The Crown

The company, however, has warned that 2021 will see more modest growth. It has set a target of 6 million subscriber adds in Q1 2021, while CFO Spencer Neumann said that after that “it’s just so difficult [to predict] in this time” and added that the company would not be providing a full year guide. “It’s hard enough to project the next 90 days, let alone the next 12 months,” he said.

The finance boss attributed the pandemic to much of its 2020 growth, and said that for the industry as a whole “it’s accelerated that big shift from linear to streaming entertainment.”

In spite of this uncertainty on subscriber growth, Netflix execs have told shareholders that it is in a healthy financial position, and that the company no longer has a need to raise external funding for its day-to-day operations.

Competing with studios

The overall growth in streaming entertainment, Netflix noted in its letter, “has led legacy competitors like Disney, WarnerMedia and Discovery to compete with us in new ways.” The company said that it has been anticipating such a move, and that it has “been moving so quickly to grow and further strengthen” its library of original content.

Tiger King

This is reflected in success for The Crown, which saw its biggest season to date, and the Shonda Rhimes-helmed Bridgerton, which debuted on Christmas day. The company also noted that the George Clooney vehicle The Midnight Sky was its largest original film of the quarter, with a projected 72 million member households expected to watch the title in its first four weeks.

Netflix also touted the success of its shows throughout the year including Tiger King and The Queen’s Gambit. The latter became Netflix’s biggest ever limited series with 62 million member households watching it in its first 28 days, while the streamer added that its original series accounted for nine out of the 10 most searched shows globally in 2020.

Content strategy

Ted Sarandos, who was promoted last year to become co-CEO, said that the company continues to scale up its productions by “more than double every year… in the scope of the projects, the ambition of the projects and the execution of the projects.”

Netflix will hope that these originals – both movies and series – will justify price increases, particularly as it loses key titles like Friends and the US version of The Office in the US, while competitors such as Disney+ ramp up their own originals.

The streamer last week released its star-studded 2021 film preview video, with Netflix promising to release at least one new original movie in every week of the year.