Netflix surpassed forecast in every market it operates in outside US & Canada — adding 8.3 million subscribers internationally, much higher than the forecast of 7 million. Competition finally showed impact and Netflix acknowledged it: the service managed 550,000 new subscribers in the US & Canada, much lower than its forecast of 600,000 new subscribers. Netflix said the miss is because of competition and “recent price changes”.

The Big Picture: The company added 8.76 subscribers globally, which it said was driven by original programming and worldwide adoption of streaming video. Revenue grew 31% YoY to $5.4 billion. Of Netflix’s 167 million subscribers worldwide, 100 million of them are outside the US. This comes amidst the so-called “streaming wars” — the launch of two major streaming service, Disney+ and Apple TV+, and two more coming this year; WarnerMedia’s HBOMax and NBCUniversal’s Peacock. Impact of competitive launches outside the US, in Netherlands, Canada, and Australia was muted, it said.

Subscriber galore worldwide, just not US & Canada: Netflix got a record number of subscribers in Europe, Middle East, and Africa (EMEA), Latin America, and Asia-Pacific. Netflix’s largest subscriber base outside the US is EMEA (Europe, Middle East, Africa) with 52 million subscribers, Latin America with 31 million, and APAC with 16 million subscribers. Interestingly, subscriber adds were highest over last quarter in APAC at 12%, followed by EMEA at 9.3%, and Latin America at 7%. ARPU is the lowest in the APAC market at $9; Netflix also launched mobile-only plans in Malaysia and Indonesia, after introducing in India in Q3.

Netflix still maintains that there is still “ample room” for streaming services to grow, and that the actual competition is with broadcast. Last quarter, it had said that the launch of Disney+ and Apply TV+ will accelerate the shift from TV to streaming, and had even downplayed the possible impact of the fact that Disney+ launched in US & Canada at half of what a Netflix subscription costs. Netflix even attached a graph showing Google Trends map showing that searches for The Witcher were higher than for shows launched by Disney, Amazon, and Apple. While this seems like an unfair comparison, since Disney only launched in four countries, Netflix claims the picture would not be much different if Disney were global because The Witcher is a really popular search term in Netherlands, where Disney+ also launched.

Netflix changes how it reports numbers

Netflix used to report households that have watch a show or film when they had watched 70% of a single episode of a series, or a film. It now looks at how many members chose to watch a show or movie, and then actually watched it for at least two minutes (“Chose to watch and did watch for at least 2 minutes — long enough to indicate the choice was intentional– is the precise definition”). This metric increases numbers by 35% on average.

“Our new methodology is similar to the BBC iPlayer in their rankings based on “requests” for the title, “most popular” articles on the New York Times which include those who opened the articles, and YouTube view counts. This way, short and long titles are treated equally, leveling the playing field for all types of our content including interactive content, which has no fixed length.” — Netflix

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