David Farnor | On 18, Jan 2019

Netflix has reached 139 million members worldwide after a record end to 2018.

The streaming giant added 8.8 million people in the fourth quarter of last year, 1.53 million from the USA and 7.31 million from other countries, higher than its predictions and its best Q4 performance in the company’s history. Over the course of 2018, Netflix added a record total of 29 million subscribers.

The growth is attributed by Netflix to its “high member satisfaction”. Indeed, the figures arrive as Netflix is enjoying a run of high-profile titles, from Sex Education and You to Bird Box. The latter thriller, which stars Sandra Bullock, is on course to be watched by over 80 million households, with “high repeat viewing”, while Netflix says that its original movies are starting to “mirror the success of [Netflix original] series”. (Elite, for example, has been seen by over 20 million households around the world, while Sex Education and You are forecast to be watched by over 40 million households in their first four weeks.)

Netflix is also getting ready to storm the Academy Awards, after Alfonso Cuarón won the Golden Globe for Best Feature Director and Best Foreign Language Feature for Roma.

All of this success is at at time when Netflix is bracing itself for competition in the form of Disney+, Disney’s new subscription service, as well as an upcoming platform from NBC, and existing rivals such as Hulu, Amazon Prime Video and HBO. CEO Reed Hastings, though, notes that the company is already facing “thousands of competitors” in the entertainment space, and that it “compete[s] with (and lose[s] to) Fortnite more than HBO”.

“Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members,” said Hastings in a letter to shareholders today.

One hurdle to that is the cost of Netflix each month, but Netflix is clearly confident in its current momentum: it has just raised prices in the USA for new members, after doing the same in Q4 in Canada and Argentina, and in Q3 in Japan.

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” commented Hastings. “We want to ensure that Netflix is a good value for the money and that our entry price is affordable.”

The balance between investing in more content and keeping prices affordable, though, is a major challenge: Netflix’s operating margin dipped slightly in Q4 (from 7.5 per cent to 5.2 per cent) and its revenue was lower than analysts expected.

“Our multi-year plan is to keep significantly growing our content while increasing our revenue faster to expand our operating margins,” Hastings added.

Netflix has said it does not plan to raise prices in the UK at present.

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