Netflix had 139 million paid memberships at the end of 2018, up 8.84 million in a quarter and up 28.62 million from the beginning of the year. That was a 33% increase on the 21.55 million subscribers added in 2017. Netflix is forecasting that it will have nearly 148 million subscribers by April 2019. For the first time, Netflix has reported viewing numbers.
The number of paid subscribers in the United States rose by 1.5 million to 58.49 million, fractionally higher than its own forecast. Elsewhere, paid subscriptions rose by 7.3 million to 80.77 million, ahead of its forecast of 79.56 million.
Netflix also revealed that it had 2.07 million free trials in the United States, compared to 1.51 million the previous quarter. Elsewhere it had 7.13 million free trials, up from 5.17 million the previous quarter, suggesting a strong pipeline of potential customers to convert.
Revenues for the last quarter of 2018 rose to 4.19 billion, but free cash outflow increased to $1.32 billion. The company also has over $10 billion in long-term debt.
Netflix is slowly raising its prices. New prices will be phased in for existing members in the United States in the first half of 2019.
The company said it estimates that the original production Bird Box will be viewed by over 80 million member households, which is 57% of its subscriber base.
Elite, its Spanish original production, has been viewed by over 20 million member households around the world in its first four weeks on the service, watching at least 70% of one episode.
Bodyguard, a co-production with the BBC and ITV Studios, was watched by over 10 million member households, by the same measure.
Sex Education, a Netflix original from the United Kingdom, is also expected to be watched by over 40 million households in its first four weeks on the service.
These are rather round numbers and do not correspond to traditional viewing metrics, but they have been disclosed in an official financial statement.
There were no numbers released for Bandersnatch, an interactive title in the Black Mirror series, but it is expected to lead to further interactive projects, using the ‘Branch Manager’ system Netflix created for this, saying it shows how it can marry technology and entertainment to evolve video storytelling.
Netflix said that as a result of its success with original productions it is becoming less focussed on second run programming.
“I’d say the vast majority of the content that’s watched on Netflix are our original content brands,” Ted Sarandos, the chief content officer of Netflix, told analysts.
Nevertheless, Netflix faces further competition from other online video offerings, including Disney, WarnerMedia and NBC Universal, due to launch before the end of the year.
Netflix spent $12 billion on programming in 2018, up from $9 billion in 2017. It is expected to spend $15 billion in 2019. Marketing spend also grew 65% year on year to $2.4 billion.
The company observed that delivering around 100 million hours of viewing a day in the United States it accounts for around 10% of television screen time. It says it competes with the video game Fortnite more than HBO.
“There are thousands of competitors in this highly-fragmented market vying to entertain consumers and low barriers to entry for those with great experiences,” Netflix noted. “Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose. Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members.”