Netflix Posts Q4 Subscriber, Revenue Gains

Netflix noted its diminishing focus on second-run content and the need to continuously improve the customer experience as it released its Q4 2018 financials, which saw gains in both subscriber numbers and revenues.

The streamer reported 8.8 million net new paid streaming additions to reach a total of 139.2 subscribers globally. The net gains were driven by international, where Netflix added 7.3 million, with the remaining 1.5 million in the U.S. Netflix is forecasting a similar gain in Q1 2019 to take it to 148 million customers. Revenue at the company was up 27.4 percent from the year-ago period to $4.2 billion. For the full year, revenues were $16 billion, with a net profit of $1.2 billion.

“As a result of our success with original content, we’re becoming less focused on second-run programming,” the company said in its letter to shareholders. “We are ready to pay top-of-market prices for second-run content when the studios, networks and producers are willing to sell, but we are also prepared to keep our members ecstatic with our incredible original content if others choose to retain theirs for their own services.”

The streamer highlighted the success of its content investments, including Bird Box and Roma on the film side, and international series such as Elite from Spain, Bodyguard from the U.K., Baby from Italy and The Protector from Turkey.

“Our multiyear plan is to keep significantly growing our content while increasing our revenue faster to expand our operating margins,” the shareholder letter said.

Addressing the competitive environment, Netflix said that in the U.S. it earns about 10 percent of television screen time. “We compete with (and lose to) Fortnite more than HBO,” the letter states. “There are thousands of competitors in this highly-fragmented market vying to entertain consumers and low barriers to entry for those with great experiences. Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose. Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members.”