OTT

Netflix Eclipses 75M Subs Worldwide

Added 17M During 2015 1/19/2016 4:15 PM Eastern

Netflix said it rang in 2016 by crossing the 75 million subscriber mark worldwide, as it ended Q4 2015 with 74.76 million as it added more than 17 million net adds during the calendar year.

 

Looking ahead, Netflix expects to grow by more than 6 million subs in Q1 2016 following its recent expansion into an additional 130 countries (but not yet China).

 

Following the release of its Q4 numbers, Netflix stock jumped 8.22% ($8.77) to $116.76 each in early after-hours trading. 

 

Netflix posted total Q4 streaming revenues of $1.67 billion, a smidge above the company’s forecast of $1.66 billion, and a contribution profit of $270 million. It expects total streaming revenues in Q1 2016 of $1.81 billion, and a contribution profit of $302 million.

 

The company added 1.56 million U.S. streaming subs, below an anticipated 1.65 million, expanding its total in the category to 44.74 million. Netflix said it expects to add 1.75 million U.S streaming subs in Q1 2016.

 

Our high penetration in the US seems to be making net additions harder than in the past,” Netflix said in its letter to shareholders (PDF). “New credit/debit card rollover continues to be a background issue.”

 

On the global front, Netflix added 4.04 million international streaming subs in Q4, beating an anticipated 3.50 million. It ended Q4 with 30.02 million international streaming subs, and sees that total rising to 34.37 in Q1 2016.  International streaming revenues in Q4 reached $566 million, expected to rise to $653 million in Q1 2016. Netflix’s international efforts also swung to a loss of $109 million in Q4, a figure expected to widen to $114 million in Q1 2016. 

 

Netflix noted that it’s seeing “increased adoption” of  an  $11.99 per month plan that provides access to a growing library of titles in Ultra HD format.

 

The company warned that it will be releasing a “substantial number” of U.S. subs in Q2 and Q3 from price grandfathering on the HD plan – they will still have an option to stay on a plan that’s $7.99 per month, but it will convert to SD, or get HD for $9.99 a month. “Given these members have been with us at least 2 years, we expect only slightly elevated churn,” Netflix said. 

 

Netflix reiterated its plan to launch more than 600  hours of original programming in 2016, up from 450 hours last year – including new seasons of about 30 original series, eight original feature films, 35 new seasons of kids shows, a dozen documentaries, and nine stand-up comedy specials. 

 

Netflix also readdressed third-party research on usage and ratings that suggest that Netflix’s impact on traditional TV models has been minor.

 

“The growth of Netflix has created some anxiety among TV networks and calls to be fearful,” the OTT giant said. “ Or, at the other extreme, an NBC executive recently said Internet TV is overblown and that linear TV is ‘TV like God intended.’ Our investors are not as sure of God’s intentions for TV, and instead think that Internet TV is a fundamentally better entertainment experience that will gain share for many years.”

 

On that point, Netflix said traditional media players are already shifting their strategies and using revenue from Netflix and other SVOD services to shore up OTT plays, citing examples such as NBCU’s Seeso, Hulu, CanalPlay, HBO Now, and CBS All Access, among others.

 

And here’s a stat to close Netflix’s book on 2015: Subs streamed 42.5 billion hours last year, up from 29 billion hours in 2014.

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