Netflix Clears 200 Million Global Subscribers, Despite Fiercer Competition Than Ever

Twelve months ago, Netflix had just logged 160 million global subscribers and was leaning further into international growth to fuel its growth ambitions. A year later, that subscriber count has grown by more than 40 million, and the company has easily cleared the 200 million subscriber mark—marking another huge milestone for a streaming giant that somehow keeps getting bigger. At the end of the company's fourth quarter, Netflix has more than 203 million global subscribers. The numbers, an addition of 8.5 million subscribers in the last quarter alone, make Netflix an even tougher incumbent to beat as rival services like Disney+, Discovery+, Paramount+, Peacock and HBO Max look to build out their own all-purpose streaming offerings to compete head-to-head. But in a note to shareholders as part of its quarterly earnings, Netflix, which has long shrugged off its 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.” On a prerecorded investor interview discussing the results, Netflix co-CEO Reed Hastings offered heaps of praise to Disney+, which has cleared 86 million subscribers after just over a year in the market. "It's super impressive what Disney's done," Hastings said. "It's an incredible execution for an incumbent to pivot, taking on an insurgent. It shows that members are interested and willing to pay more for more content, because they're hungry for great stories—and Disney does have some great stories. So that gets us fired up." The fierceness of the competition is perhaps easily stomached considering Neflix's 200 million 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. Despite the growth, executives emphasized that there was still room to grow — especially as linear continues to decline. "We're still under 10% of television viewing time as Netflix," Hastings said. "We've got a lot of subscribers here in the U.S., but we still have a lot of viewing time that we'd like to earn with an incredible service and with incredible content." 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. We're still under 10% of television viewing time as Netflix. We've got a lot of subscribers here in the U.S., but we still have a lot of viewing time that we'd like to earn.Netflix co-CEO Reed Hastings 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 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 plan is to pay for a new wave of programming that will help sustain members and allow for even more releases. The streamer is already planning to release at least one new original film every week in 2021. “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 in its letter to shareholders. Netflix 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 and select something for themselves. That feature will roll out in the first half of the year after early tests showed they were very effective in engaging members, chief product officer Greg Peters said on the interview with investors. Other tests, including a linear feed in some international markets, are less clear in terms of their effectiveness, he said. On the content side, Netflix highlighted some of its biggest programming wins in the quarter. Sixty-two million member households watched The Queen’s Gambit in its first 28 days on the service, making the show Netflix’s biggest limited series yet while fueling a rush from fans to learn to play chess. Related: How The Queen’s Gambit and the Pandemic Turned Into a Perfect Storm of Sales for Chess Meanwhile, Lupin, a fast-paced French heist series, is projected to be watched by 70 million member households in its first 28 days on the service. Those figures add to already impressive viewership on the service's newest titles. As The Office left its home at Netflix to head over to NBCUniversal-owned streamer Peacock earlier this month, the company said originals like Bridgerton and Cobra Kai were bringing in big viewership figures for the service. (However, note that Netflix defines a view as when a member has watched just two minutes of a program.) "The way that people have enjoyed these series and films is unprecedented," co-CEO and chief content officer Ted Sarandos said during the investor interview. There’s another milestone to note for the still-dominating streamer: The company is reaching a point where it is generating enough cash to be free cash-flow positive. “Combined with our $8.2 billion cash balance and our $750 million undrawn credit facility, we believe we no longer have a need to raise external financing for our day-to-day operations,” the company said.