Netflix has dismissed any suggestions the so-called streaming wars would be its undoing. With its latest earnings report, the company still isn’t sweating the pressure, as it added more subscribers than expected even as it faced new rival services from Disney and Apple.
The world’s dominant subscription streaming service, Netflix saw subscribers jump by 8.76 million to 167.1 million total, beating its October guidance to add 7.6 million members. Domestic membership growth was shy of the company’s prediction, though, in the market with the most intense streaming competition. But its membership numbers abroad outstripped Netflix’s expectations, the company detailed in a report Tuesday on its fourth-quarter results.
The company’s outlook for next quarter’s subscriber growth was modest compared to what analysts had been expecting. Netflix predicted 7 million new subscribers in the first quarter of this year, but Wall Street was expecting 8.8 million before the latest result outperformed.
Like it or not, Netflix’s latest numbers will set the tone for how it’s expected to weather the so-called streaming wars, a seven-month window when media and tech giants are rolling out a slew of new services. Chief among them has been Disney Plus, which launched Nov. 12 and quickly signed up 10 million accounts in little more than a day. Analysts at Cowen estimated its subscribers ballooned to 24 million three weeks later. The victors of these competitive battles will not only shape the future of television in the streaming age, but also influence how many services you’ll have to pay for to watch your favorite shows.
Netflix took a swipe at its competitors, comparing a worldwide Google search trend graph for its series The Witcher with search interest for The Mandalorian on Disney Plus, The Morning Show on Apple TV Plus, and Jack Ryan on Amazon Prime Video. Spoiler alert: Witcher search interest had the highest spike.
But even Netflix, in fine print, disclosed that the comparison to The Mandalorian wasn’t entirely fair. Unlike global services like Netflix and the other rivals tracked in the chart, Disney Plus has launched only in the US and a few other, smaller markets. By tweaking this same Google trend chart to just US searches, the popularity of The Mandalorian is more competitive with The Witcher.
In the past, Netflix has dismissed the threat of the streaming wars, pointing out that the company has grown pretty well even though it’s been competing with streamers as well as traditional TV for over a decade. It reiterated that rhetoric Tuesday.
“This is happening all over the world and is still in its early stages, leaving ample room for many services to grow as linear TV wanes, Netflix said in its letter to shareholders. “We have a big head start.”
Domestically, Netflix added 520,000 streaming customers, shy of its October guidance for 600,000.
Netflix’s international subscriber base widened by 8.33 million members, beating the 7 million additions the company predicted. Broken down by market, it reported 4.42 million new members in Europe, Middle East and Africa; 2.04 million in Latin America; and 1.75 million in Asia Pacific.
Looking ahead to the first quarter, Netflix expects to add 550,000 streaming members in the US and Canada, it’s biggest single market. (Again, it expects 7 million new subscribers in the next quarter worldwide, so most of the growth will come from overseas.)
Netflix also predicted $1.66 per share in earnings in the first quarter. On average, Wall Street analysts who track Netflix expected $1.21.
Overall in the latest period, Netflix reported a profit of $587 million, or $1.30 a share, compared with $133.9 million, or 30 cents a share, a year earlier. Revenue rose 31% to $5.47 billion. Analysts on average expected per-share profit of 52 cents — compared with Netflix’s guidance of 51 cents — and $5.45 billion in revenue.