Thanks to Homebodies... 'OTT Giant' Netflix Surpasses 200 Million Paid Subscribers for the First Time (Comprehensive)

[Asia Economy Reporter Seulgina Jo] Netflix's global paid subscriber count has surpassed 200 million for the first time ever. This growth is attributed to the surge in demand for online video services (OTT) due to the increase in so-called 'homebodies' amid the COVID-19 pandemic. Notably, there has been a clear increase in subscribers in the Asia-Pacific region, including South Korea and Japan.

On the 19th (local time), Netflix announced in its earnings report that its global paid subscribers reached 203.6 million last year, an increase of 37 million from the previous year. This marks a new milestone, reaching 200 million subscribers for the first time in over three years since surpassing 100 million in Q3 2017. The annual net increase of 37 million is the largest ever recorded.

Quarterly, the fourth quarter of last year saw a net increase of 8.5 million new paid subscribers. Although this does not match the 15.8 million gained in the first quarter of last year immediately following the COVID-19 pandemic, it exceeds the initial market forecast of 6.47 million.

Regionally, the growth in the Asia-Pacific area, including South Korea and Japan, was particularly pronounced. As of the end of last year, the number of paid subscribers in this region was 25.49 million, a 57.1% increase compared to the previous year. While the cumulative subscriber numbers are smaller than those in North America (73.94 million, +9.2%), Europe, Middle East & Africa (66.7 million, +28.81%), and Latin America (37.54 million, +19.47%), the growth rate is the most remarkable.

However, Netflix expects the global subscriber growth trend to significantly slow down starting this year. Earlier, Netflix founder and CEO Reed Hastings acknowledged the surge of many people flocking to Netflix during the pandemic and warned that the subscriber growth trend seen last year would not continue. The sharp decline in net additions in Q3 last year supports this.

Additionally, from the second half of the year, global OTT competition has intensified with players like Apple TV Plus, Discovery Plus, Disney Plus, HBO Max, and Peacock. Disney Plus, a formidable competitor to Netflix, secured 87 million paid subscribers in its first year alone. IT media outlet The Verge assessed that "Netflix still holds the OTT throne, but it won't be as easy as before."

Research also shows that one in four subscribers tend to cancel existing services to subscribe to other OTT services, posing a threat to Netflix's dominance. According to a Deloitte survey, 62% of those who subscribed to an OTT service to watch specific content unsubscribed once that content finished airing.

Netflix is also focusing on expanding its content in response. In a letter to shareholders, Netflix emphasized, "Our strategy is simple," adding, "If we improve Netflix every day to provide better enjoyment to subscribers, we will be the first choice in streaming entertainment." Previously, Netflix announced plans to release at least one movie per week. The original content 'Sweet Home,' co-produced with Korean creators, ranked among the most popular globally, chosen by 22 million paid subscribers worldwide during its first four weeks after release last month.

Netflix's Q4 earnings per share disclosed on the day were $1.19, falling short of the forecast of $1.39. Annual revenue was $25 billion, up 24% from the previous year, and operating profit rose 76% to $4.6 billion. With $8.2 billion in cash and $750 million in unused credit lines, Netflix can operate without external financing going forward. Cash flow is expected to break even starting this year.

Netflix is also benefiting significantly in South Korea. According to WiseApp, Netflix's payment revenue in the Korean market last year is estimated at 517.3 billion KRW, the highest ever and more than double the previous year's 248.3 billion KRW. The number of paid Netflix subscribers in South Korea surged from 2.72 million in March last year to 7.58 million by the end of the same year.