In a note to shareholders as part of its quarterly earnings, Netflix, which has long shrugged off the competition, acknowledged for the first time just how crowded the streaming entertainment space has become.
“Discovery recently launched its streaming service. Disney+ is expanding in new countries and with more content,” the shareholder’s letter read. “ViacomCBS will be unveiling its plans for Paramount+ in 2021. Combined with the launch of AppleTV+, WarnerMedia’s HBO Max, and NBCUniversal’s Peacock streaming services, this signifies that these companies all recognize the future is streaming entertainment, a vision we have been working towards since inception.”
That competition is perhaps more easily stomached amid the streamer’s considerable subscriber milestone, which provides evidence of just how beneficial pandemic-fueled consumer shifts to streaming have been for Netflix. Over the course of 2020, the service—which found success with hits like Tiger King early on in the Covid-19 pandemic and saw its subscriber count continue to balloon as people remained at home—added a record 37 million paid memberships and cleared $2 billion in annual revenue, a 24% year-over-year increase.
“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,” the company said.
The speed at which Netflix’s subscriber count is growing is a remarkable pace: It was April 2017, less than four years ago, when Netflix cleared the 100 million subscriber mark after first allowing users to stream movies and TV shows in 2007.
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’s letter to shareholders
Netflix’s 100 million subscriber milestone then helped them raise capital for an aggressive push into the global market that has only intensified. That strategy, which other streamers are following, is evident in Netflix’s subscriber breakdown: Nearly 62% of Netflix’s subscribers are now from markets outside the U.S. or Canada, according to the figures released today, and 83% of the company’s paid net subscriber additions in 2020 came from outside of the U.S.-Canada region.
In the U.S. and Canada, where its average revenue per membership is highest, the company only added 860,000 new subscribers in the fourth quarter.
Netflix raised its prices in late October to help pay for the growing amount of new programming on its service as viewers continue to watch in high quantities as the pandemic continues disrupting everyday life. The hope, the company said, is to help pay for a new wave of programming that will help sustain its members and allow it to continue growing even more—beginning with an effort to release at least one new original film every week in 2021.
The company is also working on a feature that allows its members to immediately begin watching a recommended title for them, instead of needing to browse through Netflix’s enormous library. That feature will roll out in the first half of the year, the company said.