Netflix has beaten other steaming giants and earned itself 8.5 million new paid subscribers at the end of 2020. It has surpassed 200 million subscribers for the first time, as many streaming platforms compete for viewers, with people stuck at home amid the pandemic.
Netflix soared up these subscribers during the October-December period, which marks its biggest-ever year since its inception as a DVD-by-mail service in 1997. It went from needing investments to now be able to sustain itself. Netflix Inc. says it is now capable of generating more cash than it needs, and they no longer have to rely on borrowing money to invest in its growth strategy. Its shares have gone up 12% in after-hours trading.
Netflix continues to grow in the face of fierce competition in the international market. Other streaming services like Apple TV, HBO Max, Comcast Corp.’s Peacock, Walt Disney Co.’s Disney+ are eager to expand their viewership.
The company’s boost comes when people are staying home and finding unusual ways to stay busy. Netflix has been able to fill this gap by expanding its lineup of TV series and movies, providing non-stop entertainment for the watchers.
According to Wall Street Journal, “Netflix creates its content much further in advance than broadcast and cable channels … [and] last week, it unveiled a movie slate that will see a new release on the platform every week of 2021.”
The vast majority of its growth came in the first two quarters of the year, with Netflix accumulating 8.5 million subscribers in the fourth quarter. It gained 2 million subscribers in Asia, 4.5 million in Europe, Africa, and the Middle East, and more than 1.2 million viewers in Latin America by having a close look.
The company is also set to take advantage of new markets, such as Sub-Saharan Africa, where industrial forecasters have predicted that the content streaming will swell in the course of coming years.
Netflix is delighted by the outcome it has achieved and said in its Q4 letter to its stakeholders that the growing competitiveness “signifies that these companies all recognize the future is streaming entertainment, a vision we have been working towards since inception.” The company also added, “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. This past year is a testament to this approach.”
On the earning video interview on Tuesday, Netflix’s co-CEO Reed Hastings said that the company still has much more room for improvement. He added that even in the US, where they had been able to penetrate 60% of the households, the company enjoys less than 10% of the TV viewing time. Reed said, “We’ve got a lot of subscribers here in the U.S. But we still have a lot more viewing time that we would like to earn with an incredible service and incredible content.”
Despite the growth, Netflix still faces many challenges, with Disney+, a much wealthier rival, earning itself 90 million subscribers in the very first year of its establishment.
Netflix spends so much money on new and original content to retain the viewers than the videos bring in. However, the company has stayed profitable according to the accounting standards granted by the entertainment industry.