Netflix Passes 200M Users, Happy Times In FAST-Land

1. Netflix Passes 200M Users

Netflix impressed itself and investors in its Q4 earnings report by bringing in more users than anyone expected: while the company had counted on 6 million new subs, they wound up with 8.51 million, putting them over the 200 million mark worldwide.

Why It Matters

While 200 million is an impressive number, what’s more significant is that Netflix “said it is now able to generate more cash than it needs, and no longer anticipates having to borrow money to fuel its growth strategy.”

This is huge because that’s long been haters major knock on Netflix: that they were borrowing insane sums of money in order to fuel their growth. 

Another key stat is that most of Netflix’s new growth came from outside the US and Canada. There were only 860,000 new subs in the two North American countries, versus 4.5 million in EMEA, 2 million in Asia and 1.2 million in Latin America.

Three things worth noting with regard to Netflix:

A rising tide lifts all boats. As much as the media wants to make “streaming wars” happen, the reality is (and yes, I know I keep saying this) there is now more programming and better programming on streaming for less money. So it’s inevitable that many more people will switch to streaming over the next few years which will serve to  lift Netflix, the OG streaming service and generally the first one everyone signs up for.

The developing world is tricky. While it’s easy to charge people in the US and Germany the equivalent of US $14/month, that’s crazy expensive to most people in other regions and it’s going to severely limit the reach of Netflix and other US-based streamers. This isn’t conjecture: Netflix and Amazon have both had to significantly lower their prices in India by rolling out a mobile-only version of their services in order to compete with Disney’s ad-supported Hotstar, which was priced at something like one-tenth of Netflix’s original price.

Not everything’s a hit. Netflix was fortunate in that they had a large number of original series stockpiled that they were able to roll out during the pandemic when all of their competitors were busy showing reruns. And while there’s been a lot of grumbling over how many Netflix series were not very good, when you get a lot of at bats, you’re usually able to get a couple of hits. So The Queen’s Gambit, The Crown, Bridgerton and Lupin all combined to help keep Netflix’s reputation as a must-have service. 

What You Need To Do About It

If you’re Netflix, just keep doing what you’ve been doing. You have a huge head start internationally and you’re still the service the top actors, writers and producers want to be associated with. Just figure out what is going to work in the developing world and if it means rolling out an ad-supported option in those regions so you can compete, that’s not the end of the world. (You can even give it a different name so it doesn’t mess with your branding.)

If you’re one of the other Flixes, remember that Netflix is always going to be the New York Yankees, IBM and Citibank combined. You’re never going to catch them, but their success does not correlate with your failure. Concentrate on providing something Netflix doesn’t offer and you’ll be fine. 

2. Happy Times In FAST-Land

There’s been a lot of good news coming from the FASTs this week. Fox’s Tubi service reported that viewing was up 58% over the past 12 months, with viewers logging 2.58 billion hours. VCBS’s Pluto is about to launch in France, the first of the US-based FASTs to unfurl its banner there, And VIZIO’s SmartCast platform will now feature the free CBS Sports app along with “shoulder” (e.g., everything but the actual game)  content from the NFL, the Pac-12 conference and beIN Sports.

Why It Matters

Remember how your older Super Platinum cable package had 1,000 channels that you were paying well over $100/month for? Well much of that programming is now available for free on the FASTs and it’s helping to drive the shift to streaming as much as the existence of nine multibillion dollar subscription Flixes is.

The more there is to watch on streaming, the less people are going to want to watch traditional pay TV, especially if much of what there is to watch on streaming is free.

The VIZIO deal is notable because sports and news are the two content buckets keeping people tied to cable, so the more sports options there are on streaming, the easier it is for people to decide to go streaming-only.

It will be interesting to see what happens in France, as Pluto’s free offering attempts to compete with Molotov, the popular homegrown FAST. The latter has a five year head start and a wealth of French-language content, so much will depend on the market’s appetite for American TV shows. Here again, it’s unlikely to be a winner/loser situation but rather a rising tide one, where viewers realize that together, Molotov and Pluto give them a more complete viewing experience. 

Final note on the FASTs is the development of what essentially amounts to two unique ecosystems, one built around network-owned apps like Pluto and Tubi and the other around device OEM-owned apps like WatchFree and The Roku Channel. We will be keeping on eye on how that plays out.

What You Need To Do About It

If you are one of the Big Four sports leagues, you need to figure out what your streaming strategy is going to be (though I have no doubt this has been a major topic of discussion for a while now.) While there are all sorts of complicated rights negotiations involved, the sooner you can get games onto streaming the better, both for you and for your fans.

If you’re a Flix, remember that the FASTs are your friends. By giving people more to watch on streaming they’re helping to convince more viewers to make the switch. 

If you’re a FAST and you’re expanding overseas, don’t forget the developing world, where free is an excellent price and can quickly win you a wider audience than high-priced Flixes.