Netflix now has over 70 million paid subscribers worldwide. Over 60% of them are in the United States, where Netflix accounts for over 60% of peak online video traffic. Now available in almost every country except China, the online video service aims to gain 6.35 million more members in the first quarter of 2016. It could have over a 100 million subscribers in 2017.
Netflix gained 4.82 million paid members in the last quarter of 2015, against its own projections of 4.40 million.
Netflix added 1.33 million subscribers in the United States, its lowest gain for the fourth quarter in four years. Netflix gained 5.70 million members in the United States in 2015, compared to 5.99 million the previous year and 6.24 million the year before that.
The company conceded “Our high penetration in the US seems to be making net additions harder than in the past”. It is still aiming to add 2.00 million paid members in the United States in the first quarter of 2016.
Outside the United States, Netflix added 3.49 million subscribers for a total of 27.44 million. It is now targeting an addressable market of over half a billion broadband homes. Netflix is still working on getting into China. It expects to gain a comparatively modest 4.35 million paid members outside the United States in the first quarter of 2016. That would give the company its greatest quarterly growth to date.
Extrapolating from current projections, Netflix could hit 100 million subscribers worldwide in 2017. Given the global opportunity, it could be sooner rather than later. It rather depends on how much international demand there is for the original programming in which Netflix is investing.
In a letter to investors, Reed Hastings and David Wells of Netflix responded to a comment from Alan Wurtzel, the president of research and development at NBC, that the broadcast model was not broken and “everyone goes back to watching TV like God intended.”
“Our investors are not as sure of God’s intentions for TV, and instead think that Internet TV is a fundamentally better entertainment experience that will gain share for many years,” they wrote. “The challenge for traditional media companies, most of whom see the future pretty clearly, is to use the revenue from Netflix and other SVOD services to fund both great content and their own evolution into Internet TV networks.”
“We don’t release title‐level ratings as our business model is not dependent on advertising or affiliate fees. Instead, we release ‘ratings’ for Netflix as a whole every quarter with our membership growth report (75 million and counting!). It is member viewing and satisfaction that propels our growth.”
Citing figures from Sandvine, Netflix observed that 37% of peak download internet traffic in North America in 2015 was for Netflix, with YouTube taking up 18%. Netflix accounted for 61% of peak online video traffic in North America.
Netflix received $6.78 billion in revenue in 2015, with a total net income of $306 million. In comparison, NBC revenues from cable television were $9.56 billion in 2014, with a further $8.54 billion from broadcast television. Comcast, which owns NBC Universal, had consolidated annual revenues of $68.77 billion.