Netflix Hits Subscription Records
Netflix Shores Up its Balance Sheets
Netflix (NFLX) announced that it ended 2020 with over 200 million subscribers, a first for the streaming platform, which has seen viewership and subscriptions number surge during the coronavirus pandemic in the United States and around the world. This growth occurred even as new streaming services—including Disney+ from Walt Disney (DIS), Apple TV+ from Apple (AAPL), and HBO Max from AT&T (T)—put pressure on Netflix over the past year.
As subscribers flocked to Netflix in 2020, the company’s revenue climbed. Netflix said the subscriber boom means that it currently has more cash than it needs so it will not have to rely on borrowing to fund its growth plans in the near future. After the announcement, Netflix shares rose 12%.
Content Backlog Helps Netflix Through Pandemic
Television networks and movie production houses have faced significant challenges during the coronavirus pandemic, as filming has been shut down and restricted. Shutdowns have led to a lack of original content on most networks just as consumers stuck at home are hungry for new shows and movies to watch. Netflix, however, has benefitted from its backlog of content.
Netflix’s wealth of ready-made content sets it apart from newer platforms, as it had a head start on content when the coronavirus pandemic hit The company said it has over 500 titles in post-production or awaiting launch on the streaming service, and last week Netflix announced it would release a new movie on the platform every week this year.
Other Platforms Expect Growth
Netflix has revised its 2021 cash flow prediction, raising the forecast to break-even. It will consider returning some money to shareholders with stock buybacks. Other streaming platforms are hoping to see similar gains in 2021. Following Netflix’s $1 subscription price-hike to $13.99 per month, Disney+ also bumped up the cost of its monthly subscription by $1 to $7.99.
Other services are also looking to increase the amount of new content on their platforms to compete with Netflix. HBO Max recently announced plans to release a large library of Warner Bros. movies on the platform.
In the current quarter Netflix said it expects to add around six million new users. That is less than half of what the company added during the same period in 2020 when the first coronavirus lockdowns sparked a surge of new subscribers. However, if the platform is able to retain the subscribers it added in 2020, it is still set up for a profitable year.
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