Even though the subscription video-on-demand leader’s growth has slowed more or less to how it predicted three months earlier, Netflix has disappointed Wall Street with its third quarter results adding ‘only’ 2.2 million customers.
Noting the current ‘challenging’ times, Netflix noted that the abated growth was primarily due to its record first half results and the pull-forward effect that it had warned of earlier in the year. Netflix had forecast 2.5 million paid net additions for Q3 20 and cautioned this this year would not be anywhere like the same time in 2019 when it saw 6.77 million paid additions, bolstered by new seasons of both Stranger Things and La Casa de Papel (Money Heist).
For the nine months of 2020 ended 30 September, the SVOD leader's results showed that it had added 28.1 paid memberships, up on the 27.8 million that it added for all of 2019. Total global streaming memberships at the end of the third quarter amounted to 195.15 million rising 23.3% compared with the same time in 2019. But as Q3 average streaming paid memberships rose 25%, streaming ARPU decreased 1.6% year-on-year. Revenues in Q3 2020 amounted to $6.436 billion, up 22.7% on an annual basis. This was the driver for operating incline of $1.315 billion, up 20.4% on an annual basis, and net income of $790 million.
Looking at key growth regions, the Asia-Pacific region was the largest contributor to Netflix’s paid membership growth in the quarter with 46% of Q3 global paid net adds and the region saw revenue rise 66% year-on-year. Netflix achieved double digit penetration of broadband homes in both South Korea and Japan in the quarter and the next target will be to replicate this success in India and other countries.
Going forward, for Q4‘20, Netflix forecast 6.0 million paid net additions, 2.2 million fewer net adds than a year earlier. It noted again stated slower growth in the back half of this year. If it achieved this forecast, Netflix would still have recorded 34 million paid net adds for 2020, well above its previous annual high of 28.6 million in 2018.
Netflix conceded that the state of the pandemic and its impact continued to make longer term projections very uncertain, but it expected growth to revert back to levels similar to pre-Covid in 2021. However, the company anticipated paid net adds to be down year-on-year in the first half of 2021 as compared with the big spike in paid net adds experienced in the first half of 2020. The SVOD leader confirmed that in its 2021 slate, the number of Netflix originals launched would be up on an annual basis in each quarter of the year. IT added that it had restarted production on some of its biggest titles including season four of Stranger Things, action film Red Notice and The Witcher season two.
For the nine months of 2020 ended 30 September, the SVOD leader's results showed that it had added 28.1 paid memberships, up on the 27.8 million that it added for all of 2019. Total global streaming memberships at the end of the third quarter amounted to 195.15 million rising 23.3% compared with the same time in 2019. But as Q3 average streaming paid memberships rose 25%, streaming ARPU decreased 1.6% year-on-year. Revenues in Q3 2020 amounted to $6.436 billion, up 22.7% on an annual basis. This was the driver for operating incline of $1.315 billion, up 20.4% on an annual basis, and net income of $790 million.
Looking at key growth regions, the Asia-Pacific region was the largest contributor to Netflix’s paid membership growth in the quarter with 46% of Q3 global paid net adds and the region saw revenue rise 66% year-on-year. Netflix achieved double digit penetration of broadband homes in both South Korea and Japan in the quarter and the next target will be to replicate this success in India and other countries.
Going forward, for Q4‘20, Netflix forecast 6.0 million paid net additions, 2.2 million fewer net adds than a year earlier. It noted again stated slower growth in the back half of this year. If it achieved this forecast, Netflix would still have recorded 34 million paid net adds for 2020, well above its previous annual high of 28.6 million in 2018.
Netflix conceded that the state of the pandemic and its impact continued to make longer term projections very uncertain, but it expected growth to revert back to levels similar to pre-Covid in 2021. However, the company anticipated paid net adds to be down year-on-year in the first half of 2021 as compared with the big spike in paid net adds experienced in the first half of 2020. The SVOD leader confirmed that in its 2021 slate, the number of Netflix originals launched would be up on an annual basis in each quarter of the year. IT added that it had restarted production on some of its biggest titles including season four of Stranger Things, action film Red Notice and The Witcher season two.
