Netflix takes swipe at Disney Plus by adding still more members worldwide

Netflix eclipsed 167 million subscribers globally. But growth was slowest in the US, where the so-called streaming wars is most intense.

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Joan E. Solsman
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6 Underground with Ryan Reynolds was one of Netflix's most popular titles in the previous quarter, which included its crucial holiday period. 

Christian Black/Netflix

Netflix has dismissed any suggestions the so-called streaming wars would be its undoing. With its latest earnings report, the company still isn't sweating the pressure, as it added more subscribers than expected even as it faced new rival services from Disney and Apple. Its not-very-secret weapon? Gigantic international scale. 

Already the world's dominant subscription streaming service, Netflix saw subscribers climb by 8.76 million to 167.1 million total, beating its October guidance to add 7.6 million members. In particular, its membership numbers abroad outstripped Netflix's prediction, the company detailed in a report Tuesday about its fourth-quarter results.

But domestic membership growth was shy of Netflix's projection, in the market with the most intense new streaming competition. 

Like it or not, Netflix's latest numbers will set the tone for how it's expected to weather the so-called streaming wars, a seven-month window when media and tech giants are rolling out a slew of new services. Chief among them has been Disney Plus, which launched Nov. 12 and quickly signed up 10 million accounts in little more than a day. Analysts at Cowen estimated its subscribers ballooned to 24 million three weeks later. The victors of these competitive battles will not only shape the future of television in the streaming age, but also influence how many services you'll have to pay for to watch your favorite shows.

Netflix took a swipe at its competitors, comparing a worldwide Google search trend graph for its series The Witcher with search interest for The Mandalorian on Disney Plus, The Morning Show on Apple TV Plus, and Jack Ryan on Amazon Prime Video. Spoiler alert: Witcher search interest had the highest spike.

But even Netflix, in fine print, disclosed that the comparison to The Mandalorian wasn't entirely fair. Unlike global services like Netflix and the other rivals tracked in the chart, Disney Plus has launched only in the US and a few other, smaller markets. By tweaking this same Google trend chart to just US searches, the popularity of The Mandalorian is more competitive with The Witcher. 

But Netflix used some of its own stats to trumpet the success of The Witcher, too. It said the fantasy series was its most popular first season of a show yet, with 76 million accounts watching The Witcher in its first four weeks. Note that Netflix's popularity figures aren't independently verified, and the latest figures adopted a new standard of measurement that boosts them about one-third than the way Netflix used to measure audience. 

In the past, Netflix has dismissed the threat of the streaming wars, pointing out that the company has grown pretty well even though it's been competing with streamers as well as traditional TV for over a decade. It reiterated that rhetoric Tuesday. 

"This is happening all over the world and is still in its early stages, leaving ample room for many services to grow as linear TV wanes, Netflix said in its letter to shareholders. "We have a big head start."

Domestically, Netflix added 520,000 streaming customers, shy of its October guidance for 600,000. 

Netflix's international subscriber base widened by 8.33 million members, beating the 7 million additions the company predicted. Broken down by market, it reported 4.42 million new members in Europe, Middle East and Africa; 2.04 million in Latin America; and 1.75 million in Asia Pacific.

Looking ahead to the first quarter, the company's outlook for next quarter's subscriber growth was modest compared to what analysts had been expecting before the fourth-quarter growth surprised them. Netflix predicted 7 million new subscribers in the first quarter of this year; Wall Street was expecting 8.8 million. 

Of those 7 million expected new members, Netflix projected it would add 550,000 streaming members in the US and Canada, it's biggest single market. The overwhelming majority will come from international markets. 

Netflix also predicted $1.66 per share in earnings in the first quarter. On average, Wall Street analysts who track Netflix expected $1.21.

Overall in the latest period, Netflix reported a profit of $587 million, or $1.30 a share, compared with $133.9 million, or 30 cents a share, a year earlier. Revenue rose 31% to $5.47 billion. Analysts on average expected per-share profit of 52 cents -- compared with Netflix's guidance of 51 cents -- and $5.45 billion in revenue.

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Originally published Jan. 21.
Update. Jan 22: Adds more details from report.