Netflix said it added 8.8 million additional global subscribers as net income and revenue rose in the fourth quarter. But growth was slow domestically, with the top streaming service adding only 420,000 users in the U.S., the result of increased streaming competition, the company said.
Net income was $587 million, or $1.30 per share, compared to $134 million, or 30 cents a share, a year ago. The company said at average revenue per subscriber rose 12%.
Revenue rose to $5.467 billion, up 31%.
The results come amid added competition in the streaming arena, most recently from Apple’s Apple TV+ and The Walt Disney Co.’s Disney+. Heavy hitters AT&T and Comcast will be entering the market this year with new services.
The addition of competition impacted domestic growth, Netflix said.
“Our low membership growth in [the United States and Canada] is probably due to our recent price changes and to U.S. competitive launches,” Netflix said in its letter to shareholders. “We have seen more muted impact from competitive launches outside the US (NL, CA, AU). As always, we are working hard to improve our service to combat these factors and push net adds higher over time.”
For the first quarter, Netflix is forecasting adding another 7 million subscribers worldwide, which bring its total to 174 million.
It sees first quarter earnings hitting $750 million, or $1.66 a share and revenues increasing to $5.731 billion, up 26%.
The guidance and domestic sub trends were below Wall Street expectations.
"Netflix continues to lead the way among all streamers with a deep slate of original content," said Neil Begley, senior VP and lead Netflix analyst at Moody's Investors Service. "Continued growth in Q4 was fueled by strong international subscriber additions, bringing the company to over 167 million subscribers at the end of 2019. We believe the company remains on track to reach 200 million global subscribers in Q1 2021, along with steadily improving margins and declining negative cash flows."
The company said that Witcher, launched in the fourth quarter, was tracking to be Netflix’s biggest season one TV series ever. Through its first four weeks of release, 76 million households had watched.
“We have a big headstart in streaming and will work to build on that by focusing on the same thing we have focused on for the past 22 years - pleasing members,” Netflix said in its shareholder letter. “We believe if we do that well, Netflix will continue to prosper. As an example, in Q4, despite the big debut of Disney+ and the launch of Apple TV+, our viewing per membership grew both globally and in the US on a year over year basis, consistent with recent quarters,”
Netflix noted that there were more searches for Witcher than there were for Disney+’s The Mandalorian, Apple’s Morning Show or Amazon’s Jack Ryan.
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