Finishing the year strong, the company impressively added nearly 29 million new paid members during the year – significantly more than the 22 million it added in 2017. This brought total paid members by the end of the year to 139 million, up 26% year over year.
As investors look over Netflix’s fourth-quarter results, here’s a look at some of the key takeaways from the quarter.
Revenue and earnings per share
Netflix’s fourth-quarter revenue came in at a whopping $4.19 billion, up 27% from 2017. Notably, the key metric was lower than management’s guidance for revenue of $4.2 billion.
Netflix’s fourth-quarter revenue came in at a whopping $4.19 billion, up 27% from 2017. Notably, the key metric was lower than management’s guidance for revenue of $4.2 billion.
As for the earnings per share, these seem to have declined from $0.41 in the fourth quarter of 2017 to $0.30. The company’s decline in earnings per share came as Netflix’s operating margin narrowed from 7.5% in the year-ago quarter to 5.2%, reflecting significant content investments during the quarter.
Net member additions
Of the 29 million new paying members Netflix added in 2018, 8.84 million joined during the company’s fourth quarter. This was well ahead of Netflix’s estimated 7.6 million paid member additions during the period.
Original hits are determining Netflix growth
Streaming incumbents like Netflix and HBO are increasingly banking on original hits to stave off threats from new streaming entrants like Disney, Amazon and AT&T. Netflix declared that blockbuster hits and unscripted content were the ones who generated most subscribers, with original movies and scripted series like “Bird Box” and U.K.-based “Bodyguard” being the main points of interest.
In the unscripted content segment, Netflix branded originals account for the majority of viewership, CEO Reed Hastings said in the interview.
Streaming incumbents like Netflix and HBO are increasingly banking on original hits to stave off threats from new streaming entrants like Disney, Amazon and AT&T. Netflix declared that blockbuster hits and unscripted content were the ones who generated most subscribers, with original movies and scripted series like “Bird Box” and U.K.-based “Bodyguard” being the main points of interest.
In the unscripted content segment, Netflix branded originals account for the majority of viewership, CEO Reed Hastings said in the interview.
Expanding on international markets and social segments
The service has seen considerable growth in emerging international markets like India and Mexico and has started to make efforts into the family and children content sector.
Another appealing feature has been the experiment with interactive story formats like “Black Mirror: Bandersnatch.”
Rising prices could lead to Netflix subscriber churn
Some other news from Netflix might not hit subscribers so positively though. The entertainment source announced that it raised its monthly subscription fees for U.S. members by 13% to 18%, depending on the plan. Its standard plan, which offers two streams in high definition, jumped to 12.99$ a month from 10.99$.
Analysts said the move will raise average revenue per user, but also is likely to increase subscriber churn in the near term.
There doesn’t seem to be cause for too much trouble as experts say that after years of heady growth in the U.S., Netflix may have entered “harvest” mode. And it’s more likely that Netflix simply doesn’t want to leave money on the table, he said. It is “collecting easily earned revenue from a service whose consumer perceived value far exceeds its price.”
