Netflix comes up tops in pandemic

Netflix has invested heavily in original shows and films, like historical drama The Crown (left), to stand out from the competition.
Netflix has invested heavily in original shows and films, like historical drama The Crown, to stand out from the competition.PHOTO: NETFLIX

SAN FRANCISCO • Netflix on Tuesday topped subscriber growth expectations in the past quarter, keeping ahead of new streaming rivals competing for viewers stuck in their homes during the coronavirus pandemic.

The streaming television leader added some 8.5 million paid subscribers in the quarter to reach 203 million, topping 200 million despite recent price hikes, its quarterly earning update showed.

"Covid-19 has accelerated that big shift from linear to streaming entertainment," Netflix chief financial officer Spencer Neumann said. "So, the underlying long-term looks good."

The company's cash flow was so strong that it will no longer borrow money to pay for operations and is considering starting to buy back shares, according to a letter to investors.

Netflix shares jumped more than 12 per cent in after-market trades following the release.

Profits dipped to US$542 million (S$717 million) in the fourth quarter, compared with US$587 million in the same period in 2019. But overall revenue in the quarter surged 21.5 per cent to US$6.6 billion.

For the full year, Netflix added a record 37 million paid memberships, said the earnings report.

"We're enormously grateful that in these uniquely challenging times, we've been able to provide our members around the world with a source of escape, connection and joy while continuing to build our business," Netflix said in a letter to investors.

Paid membership increased 23 per cent in the final quarter of 2020 when compared with the same period a year earlier, but average revenue per membership was flat, according to the Silicon Valley-based company.

While Netflix raised rates slightly in the United States late last year, the majority - some 83 per cent - of its new subscribers were from outside North America, the earnings report indicated.

FILMS TO LAUNCH

Netflix has invested heavily in original shows and films to make itself a must-have service in the increasingly competitive streaming market.

"It's super impressive what Disney has done," Netflix chief executive Reed Hastings said on the call.

"It is going to be great for the world that Disney and Netflix are competing."

While Apple, Comcast, Disney and others have fielded streaming services, Netflix thus far "has been a clear winner", according to eMarketer analyst Eric Haggstrom.

Netflix executives said their productions are back up and running in most regions after being derailed by the pandemic.

It boasted having more than 500 titles in post-production or being readied for release on the service, with the plan being to launch at least one new original film weekly.

Already the master of the pandemic-era movie landscape, Netflix last week offered a preview of upcoming releases for this year, a list with no fewer than 70 star-studded feature films.

From drama and science fiction to horror and even westerns, the slate will take in every major film genre before the year is out, with some releases poised as potential competition for major awards.

Among the most-anticipated titles is Don't Look Up, from film-maker Adam McKay of The Big Short (2015) and Vice (2018) fame and starring Leonardo DiCaprio.

The Harder They Fall, a western co-produced by Jay-Z and with a primarily black cast including Regina King and Idris Elba, also promises to be one to look out for.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on January 22, 2021, with the headline 'Netflix comes up tops in pandemic'. Subscribe