Netflix added 8 million new subscribers globally in three months, despite price rise in US
Shows such as Stranger Things and The Crown continue to draw new subscribers to streaming giant, and founder Reed Hastings plays down threat from Disney’s decision to pull its content and launch rival service in 2019
Our growing appetite for binge watching cannot be stopped – even by price increases from Netflix in its home market, the United States.
Looking at its results for the final quarter of 2017, the streaming-media giant reported far more new subscribers globally than analysts expected. The company said that 8.3 million people around the world signed up for its service over the past three months, blowing past its expectation of 6.3 million subscribers.
Many feared that Netflix would see fewer new sign-ups, in light of the company’s decision to raise its prices last year in response to ballooning costs for licensed and original shows. The standard monthly subscription in the US increased by US$1, while the premium plan increased by U$2. (Subscription fees in Hong Kong have remained the same, with HK$63 (US$8) the cost of the monthly basic plan.)
But its fourth-quarter earnings, which are the first to give us a good sense of how people responded to the increase, show those fears are unfounded. At least for now. Netflix managed to lure people to see premieres of original favourites including Stranger Things and The Crown.
The company is also benefiting from the rising popularity of online streaming in Asia; in Thailand streaming services now count more than 1.1 million subscribers.
“Netflix competes against anything you might be doing rather than watching Netflix, whether that is reading, playing video games, dining out, or going to the movies,” Jessica Lee, vice-president for communications of Netflix Asia, told the Bangkok Post. “It’s up to us to win the moments when people decide what to do with their time.
“The entertainment industry is shifting, and the future of entertainment is moving online.”
Even in the US, where the company already had 51 million subscribers and, last October, proposed an increase in its monthly charges, it managed to add an additional 2 million. That made Netflix US$3.29 billion in revenue, just ahead of analyst estimates for US$3.28 billion.
Yet while Netflix may have reason to celebrate, a big shadow still looms over its earnings – a shadow with mouse ears.
Entertainment juggernaut Disney announced last year that it would pull all of its content from Netflix in 2019. It then followed that punch with the news that it would acquire key assets from its rival 21st Century Fox. Disney – which now has not only Mickey Mouse but also Star Wars, Marvel and other core franchises to its name – has made streaming video a primary focus as Hollywood meets Silicon Valley’s moves into the entertainment world.
Netflix chief executive Reed Hastings downplayed any effect Disney might have on Netflix in a letter to shareholders. “The market for entertainment time is vast and can support many successful services,” he said.
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“In addition, entertainment services are often complementary given their unique content offerings. We believe this is largely why both we and Hulu have been able to succeed and grow.”
Other tech companies are continuing to push ahead with their own plans for original content.
Amazon.com continues to put out original films and shows of its own. Apple recently bought land in California, which the Los Angeles Times reported is a way for the company to plant its flag near Hollywood.