By Joe Flint and Micah Maidenberg
Netflix Inc. ended last year with more than 200 million
subscribers, a milestone powered by consumers left homebound by the
pandemic, eager for entertainment, and rising demand in
international markets where the streaming giant has a head start
over many rivals.
The company said it is now able to generate more cash than it
needs, and no longer anticipates having to borrow money to fuel its
growth strategy. Netflix shares were up 12% in after-hours
Netflix's continued subscriber growth comes amid heightened
competition from new streaming services including Walt Disney Co.'s
Disney+, Apple Inc.'s Apple TV+, AT&T Inc.'s HBO Max and
Comcast Corp.'s Peacock, all of which weren't around a little over
a year ago.
The company got a boost from the coronavirus pandemic, which
forced consumers to cut back on a host of leisure activities --
from dining out and vacations to visiting theaters and concert
venues -- as economies locked down. With many people spending more
time at home, streaming demand jumped.
While the majority of television networks continue to be without
most of their original content because of production shutdowns due
to Covid-19, Netflix's well-stocked content arsenal lifted it to
new heights. Netflix signed up what it said was a record 37 million
subscribers in 2020 and had a total of 203.7 million users when the
year ended -- more than twice as many as it had a mere three years
And while Covid-19 continues to wreak havoc on movie and
television productions, Netflix currently has more than 500 titles
in post production or ready to launch on the platform, the company
said. Last week, it unveiled a movie slate that will see a new
release on the platform every week of 2021.
Netflix creates its content much further in advance than
broadcast and cable channels, which allowed the company to be
better prepared to offer fresh content when the pandemic struck --
something other streaming services that were still in their infancy
weren't in a position to do.
Among the strong performers for Netflix was the racy historical
drama "Bridgerton," the miniseries "The Queen's Gambit," a new
season of "The Crown" and the George Clooney movie "Midnight
The company already has new successes in season three of "Cobra
Kai," a show it rescued from YouTube, and the French crime drama
"Lupin," which has quickly become one the most popular programs on
The company currently anticipates 2021 cash flow at break-even,
an upgrade from its earlier projection, which was minus $1 billion
to break-even. Netflix said it is considering returning some cash
to shareholders through stock buybacks.
The Los Gatos, Calif., company said it generated $6.64 billion
in fourth-quarter revenue, up from $5.45 billion for the year
earlier and thus exceeding forecasts from analysts. But profit
decreased to $542 million, or $1.19 a share, from $587 million, or
$1.30 a share, the year earlier. Analysts predicted $1.36 a share
for the latest period, according to FactSet.
For the quarter ended Dec. 31, Netflix added more than 8.5
million subscribers on a net basis, a gain that surpassed its
forecast for the period.
The bulk of the company's growth in 2020 occurred in the first
two quarters, as Covid-19 and efforts to stop its spread
transformed daily life in countries around the world. Subscriber
gains fell, meanwhile, year over year in the latest period, a
decline the company had said it expected.
Netflix sent employees a bottle of champagne and confetti to
celebrate surpassing the 200 million subscriber mark, according to
a person familiar with the matter.
In October, Netflix raised the monthly price of its most popular
subscription plan, bumping up the cost of its standard streaming
service, its most popular option, by $1 to $13.99. It still has a
less-expensive basic offering, as well as a premium one now priced
at $17.99 a month.
Netflix isn't the only streaming service benefiting from the
pandemic. Disney+ is already near 90 million subscribers since its
launch in November 2019. The company recently projected reaching
260 million subscribers world-wide by 2024.
Like Netflix, Disney+ also raised its monthly fee by $1 to $7.99
effective March 2021.
WarnerMedia's new HBO Max streaming platform, which launched
last May, hasn't grown as fast as its rivals. However, the company
recently unveiled plans to release the entire slate of Warner Bros.
theatrical movies on HBO Max simultaneously in the hopes of
boosting subscribers. WarnerMedia is a unit of AT&T.
Comcast's streaming platform Peacock, which offers a variety of
price plans including a free option, has 26 million sign-ups.
The newest entries to the streaming wars include Discovery+ from
Discovery Communications Inc., which launched earlier this month,
and Paramount+ from ViacomCBS Inc., which is scheduled to debut in
March in the U.S., Canada and Latin America.
Competition is in part "why we have been moving so quickly to
grow and further strengthen our original content library across a
range of genres and nations," Netflix said in its letter to
"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."
Netflix reported stronger subscriber growth in international
markets in the fourth quarter than domestically, continuing a trend
it has seen frequently of late. It added 860,000 subscriptions in
the U.S. and Canada in the period, but gained two million
subscribers in Asia, more than 1.2 million in Latin America and 4.5
million in the region covering Europe, the Middle East and
The company has been pushing to tap new markets abroad,
including in sub-Saharan Africa, where some industry forecasters
have projected content streaming to expand at a rapid clip in the
Netflix also said Tuesday it expects to add another six million
users in the current quarter, less than half of what it added for
the same period a year ago, which saw a huge rise due to the
Write to Joe Flint at firstname.lastname@example.org and Micah Maidenberg at
(END) Dow Jones Newswires
January 19, 2021 19:18 ET (00:18 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.