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Will COVID-19 help Netflix repeat 2019 subscriber gains?

The year gone by was the best for net subscriber additions


MUMBAI: As Netflix is about to unveil its all-important quarterly results amid expectations that the ongoing pandemic will boost subscriptions, Futuresource Consulting reflects on 2019 as being its best ever year for net subscriber additions (net adds), highlighting countries which are showing significant momentum.

Netflix gained nearly 28 million subscribers in 2019, driven by many countries which saw the highest yearly net adds since the service launched, indicating that they remain in an accelerating phase of growth. In Germany, Futuresource estimate there was an additional 2 million net sign ups, as Netflix continues to challenge incumbent Amazon Prime Video for the top spot.

Japan grew by 1.7 million subscribers, significantly beating its previous highest additions. South Korea increased by 1.5 million, double the net adds of the year before, and we also saw Italy, Spain and India, among others, all posting their best year yet.

With the ongoing COVID-19 pandemic shows no signs of abating, increasing the quantity of leisure time spent indoors, Futuresource expects to see Netflix’s next quarterly reporting to indicate how its library of fresh content, provided at good value for money, has driven strong uptake of both new and returning subscribers.

What is impressive is that many of these countries, particularly Japan, South Korea and Germany have had a relatively long gestation period, during which the global streaming giant experimented with the content length, type and format which appealed most. Subscriber net adds growth reaching the highest level to date is typically indicative of key shows resonating with the audience and therefore becoming topics of discussion within society.

It is this word-of-mouth and social media traction which inspires new consumers to sign up in order to “see what all the fuss is about”. This therefore creates a self-fulfilling prophecy, generating ever more attention and therefore translating to impressive growth figures, as we saw in 2019.

Further subscriber growth has come from partnering with telcos and pay-TV operators. Combined billing and allowing consumers to remain within a Pay-TV user interface has added more access points to a growing list of connected devices and TVs it’s available on. Moreover, some operators such as Sky have taken this arrangement to a new level and provided slick integration of Netflix’s content into a carousel along with other premium third-party content, such as hit HBO shows.

Furthermore, even within established markets such as Brazil, the UK, France, Australia and the Nordics, subscriber growth has continued, which highlights the broad appeal Netflix has. Once it has attracted subscribers, the voluminous content throughout and high quality of said content helps it maintain subscription growth. The UK for example saw subscriptions increase by 2 million in 2019, equal to its previous best ever year just one year prior, but arguably more impressive since it is now taken in 40 per cent of UK households.

Country by country, Netflix continues to localise and work out what resonates with consumers. The continued momentum in Netflix subscriptions is now also against a backdrop of an increasingly dynamic and diverse competitive landscape. However, the high-profile new service launches are at least in the short term, complementary. In its key countries, Netflix remains the staple service, with the vast majority of SVoD households choosing to subscribe. As we head beyond the lockdown, the key objective won’t just be how many subscribers Netflix adds, but also how it will continue to retain existing subscribers.

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