Netflix Beats its own Expectations by Adding 8.8 Million New Paying Subscribers in Last Three Months of 2018

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Netflix on Thursday reported an addition of 8.8 million new paying subscribers in the last three months of 2018 outperforming its own estimates of 7.6 million new subscribers. The popular video streaming service has 139 million subscribers globally which expects to add another 8.9 million in the first quarter of 2019.

The California-based company has vigorously expanded its international presence. The company offers services in 190 international markets, 130 of which were added after 2016. The growing number of subscribers has been credited to this expansion. It also beat its expectation of earnings per share of 24 cents, as actual EPS were 30 cents. The revenue stood at $4.19 billion lower than estimated $4.21 billion.

The numbers which were part of an investor letter, also reported viewership numbers of several popular titles. Netflix has pointed out that it only counts someone as a viewer if they watch at least 70% of the episode or movie. The popular titles like the series ‘You’ and movie ‘Sex Education’ is going to be viewed by more than 40 million households in first four weeks of service. As these titles are Netflix’s original series and movie, it shows that the viewership numbers are not dependent on outside sources of content and that its continued success is based on original content.

Netflix stated that although networks, studios and producers are willing to sell their 2nd run content at top of the market prices, the overwhelming success of its original movies and TV shows has shifted the company’s reliance from 2nd run programs to developing more incredible original content.

The company faces certain challenges to effective monetization of its subscriber base as most of subscribers share passwords with others leading to multiple viewerships from the same account. A UK startup SynaMedia demonstrated an artificial intelligence driven tool which allows streaming platforms an insight into the behavior of its account holders. The tool which uses machine learning algorithms promises to detect whether their users are sharing passwords with number of people. This tool if used by streaming services like Amazon, Hulu and Netflix will reduce the number multiple views from a single account. This will help determine whether certain logging patterns are legitimate. The adoption of the tool may increase revenues of the streaming services through additional fees from new accounts.

The company stated that it contributes to 100 million hours of viewing per day of the American TV screens which is 10% of the total viewing. The video streaming services are witnessing severe competition in the field as new players enter the field. The company said that it competes more with Fortnite, the online video gaming service than HBO.

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