Data from Netflix’s 2019 third quarter Securities and Exchange Commission filing shows over 158 million paying subscribers worldwide. The numbers are likely to increase further as fourth-quarter numbers have yet to come in. There were also over 5.5 million free trial customers who may potentially migrate to paid subscriptions after their free trial ends.
Netflix is over two decades old. A pivot from their original DVD rental service launched a trailblazing Over-the-Top (OTT) streaming business that is constantly copied but has, so far, not been matched.
Netflix’s US subscriber base is 60.62 million and has seen a tapering off with competition from other players crowding the streaming subscription market. US subscribers have multiple accounts with other streaming services that eat into Netflix’s potential revenue earnings. Aggressive worldwide expansion that started in 2010 has grown Netflix’s subscribers and has become the focus of its subscriber growth.
This article explores Netflix’s number of subscribers, the OTT provider’s place as the leading streaming service worldwide, and will delve into the categories below:
Lab42, a Chicago-based market research firm, classified streaming video subscribers based on their OTT service preference. Netflix subscribers are the “Mainstreamers” with the average age in the range of Gen-Xers (35-54 years old), live in suburban and urban areas, and have an annual income of less than $100,000.
Of the streaming video subscribers polled, 84% show a preference for Netflix. 46% use Amazon Prime and are classified as “Hip Seniors” with an age range of 55+, are highly educated, and have a diverse range of interests. Last are the “Bohemians” with a Millenial age skew, likely single, uneducated, earning entry-level pay, and are Hulu subscribers accounting 28%.
Netflix is available in 190 countries. The international expansion started in 2010 and was slow to pick up at the beginning but now includes countries such as Afghanistan, East Timor, and Greenland.
To date, the US has the highest subscriber penetration rate at 64.5%. The rest of the countries in the top ten with the highest Netflix penetration are in the western hemisphere with the exception of Australia.
Source: eMarketerDesigned by
There are three countries and one disputed territory where Netflix is unavailable: China, North Korea, Syria, and Crimea. North Korea, Syria, and Crimea have US sanctions against them preventing Netflix from doing business in those countries.
The company is still working out options that will allow it to operate in China. However, it is not a total loss for Netflix: for now, its content is licensed to stream on local video streaming sites. Netflix opted out of operating in China due to stiff local competition and strict censorship restrictions. If Netflix can penetrate the China online video market—with an estimated market worth of $17.5 billion for 2020—they would be an even bigger OTT juggernaut.
The international market is where a big chunk of Netflix’s revenue comes from. The focus is on the Asia Pacific region, currently the smallest in the number of paid subscribers but has the biggest growth potential. The APAC region saw nearly three times the number of subscriber growth compared to other continents in the same period—third-quarter 2017 to third-quarter 2019.
Netflix’s core subscribers in the US are Gen-Xers and Millennials based on a study conducted by CivicSciences. The differences between age groups were larger in 2015 with 18-34 year-olds making up a huge share of Netflix subscribers while the 65 and over group were the smallest. The median age is now with the 35-44 age group in 2017 and beyond. Increases were also seen across the age groups of 34 to 65+ year-olds. The exceptions are the 18-24 year-olds and 25-34 year-olds with the former showing a steep decline to a third of its original—11% from 32%.
Women are more likely to be cable TV viewers than men according to the Pew Research Center (63% vs. 55%). In contrast, men are more likely to stream online content for entertainment (31% vs 25%). Netflix’s user base goes against this grain as it splits with a slight skew towards women at a 49:51 ratio.
Netflix appeals to viewers with a broad range of educational backgrounds but those who went to college are more likely to have an online streaming service subscription. Roughly 1 in 3 people who are college-level educated or have college degrees are Netflix users.
The results for annual income show a correlation between higher subscription rates and higher income levels. Households with an annual income of less than $30,000 rely on traditional TV for their news and entertainment while those earning a median income of $50,000 are more likely to have a Netflix subscription.
Netflix bases its recommendations on a global algorithm based on what its users watch, like, and rate regardless of where the subscribers are from. Age and gender offer helpful insights for marketing and forecasting revenue goldmines but when it comes to tastes and preferences, there is a global average with no huge differences in what subscribers watch, like, and rate.
OTT subscriptions in the US are high with Netflix as the preferred paid subscription service, Amazon Prime Video and Hulu are the closest competitors. YouTube is in a unique position as the leader for most video streams but is not considered actual competition. It relies on ads for revenue and not the paid subscription-based revenue model as Netflix, Amazon Prime, and Hulu does.
Amazon Prime Video
Source: eMarketerDesigned by
It has been reported that as of 2017, Netflix subscribers have binge-watched over 1 billion hours of content. The average Netflix subscriber watches 60 movies a year. On average, about half of Netflix subscribers stream several times a week.
Interestingly, those who have Netflix and other OTT subscriptions use Netflix up to 60% higher, multiple times a week compared to their other streaming subscriptions.
The rise of Netflix and similar platforms have had such a huge impact they’ve affected the English language. Binge-watch was Collins English Dictionary’s 2015 word of the year. The word entered pop-culture consciousness in 2013 when Netflix began releasing whole seasons of their shows in one go. The move is strategic marketing genius, feeding the frenzy of “just-one-more-episode” and boosting streaming views.
According to Netflix, the following shows are the top first-binges of new subscribers. The content is a mix of original and licensed content assets.
|Top 20 First Binge Shows on Netflix|
|1.||Breaking Bad||11.||Sons of Anarchy|
|2.||Orange Is the New Black||12.||Dexter|
|3||Stranger Things||13.||Gossip Girl|
|5.||Narcos||15.||The Vampire Diaries|
|6.||House of Cards||16.||Suits|
|7.||The Inbetweeners||17.||Gavin and Stacey|
|8.||American Horror Story||18.||The Crown|
|9.||Peaky Blinders||19.||Making a Murderer|
|10.||Pretty Little Liars||20.||Homeland|
The next list comprises the most-streamed TV shows on Netflix for 2019.
|Most-Binged TV Shows on Netflix in 2019|
|1.||Stranger Things||11.||Big Mouth|
|2.||Lucifer||12.||Queer Eye (Season 4)|
|3||Orange Is the New Black||13.||Mind Hunter|
|4.||13 Reasons Why||14.||Designated Survivor|
|5.||Marvel’s The Punisher||15.||Frankie and Gracie|
|6.||The Umbrella Academy||16.||Dead to Me|
|7.||Marvel’s Jessica Jones||17.||The Rancher|
|8.||Chilling Adventures of Sabrina||18.||One Day at a Time|
|9.||Santa Clarita Diet||19.||Atypical|
Going mobile has been the trend for the last decade with everything: websites, shopping, banking, gaming, and streaming—all optimized for a smartphone’s screen. Netflix can be viewed on mobile devices, PCs, and TVs. Subscribers can also sign up from the said devices.
Data from Netflix has shown that 70% of its content is streamed from a television.
Regardless of the device where the subscription was made, Netflix subscribers would eventually migrate from their handheld devices and computers to watch on their TVs.
As previously mentioned, Netflix has 158 million paid subscribers worldwide. This translated to revenue of $5.245 billion as of September 30, 2019, registering a 31.16% year-on-year increase from the previous year.
Netflix is one of the highest-earning media services providers on the market right now and is considered a unicorn (a tech company with a valuation of over a billion dollars), but where does the money come from?
The Netflix business model is based on a monthly subscription. The business has three segments: domestic streaming, international streaming, and domestic DVD rentals. The first two generates revenue from monthly subscription fees to stream content. The subscription rates have three tiers: Basic, Standard, and Premium. The third segment was the original business model until the company pivoted to OTT streaming in 2007. Netflix DVD currently has 2.2 million subscribers and generated $76.2 million in revenue for the second quarter of 2019.
Although Netflix continues its upward trend in subscriber growth, the business is not profitable yet. There is revenue and their growth numbers are astronomical; the business grew over 30% from the same period (third quarter 2018 – 2019). A closer look at their recently released financial statement would show it owes over $10 billion and have negative cash flow.
Despite the ballooning debt—Netflix took on another $2 billion in debt funding to finance its content library—Moody’s forecasts the company will see positive cash flow by 2023.
There is an average of 2.5 viewers per Netflix subscription making the global total viewership go beyond 300 million. Netflix has traditionally turned a blind eye to password sharing. Competition from the OTT sphere and the possibility of Disney+ and other video streaming players cutting into its market share has Netflix rethinking its passive stance on password sharing.
There are 14% of US Netflix users who stream content using an account that someone else pays for. This is on top of 27% of users who stream using a subscription paid for someone in their household.
Netflix reports it loses $1.5 billion in potential income from password sharing. The losses could go higher with a Parks and Associates report placing the figure at $6.6 billion in losses from password sharing and piracy for the TV industry.
Source: Park Associates via Bloomberg
The problem is finding a balance between securing accounts of legitimate subscribers, weeding out the moochers, and avoiding alienating potential subscribers.
North America has generated paid subscription revenue of $67.1 million, 43% of worldwide revenue. US subscribers pay more with Netflix generating an average of $12.36 per paying subscriber. The figure is significantly lower at $9.45 for other parts of the world.
US and Canada
Europe, Middle East, and Africa
Source: NetflixDesigned by
India tops the list of most cost-effective places for a standard subscription. You pay $0.00082 for every content title available in a library with over 5,500 titles.
|No. of TV Shows||No. of Movies||Total Library Size||Cost Per Month Standard (Local)||Cost Per Month Standard ($)||Cost per Title Standard ($)|
|South Africa||1709||3278||4987||ZAR 139||$9.22||$0.00092|
|United Kingdom||1842||3831||5673||GBP 8.99||$10.91||$0.00096|
In contrast, Iran only has 2,301 titles in its library which will end up costing the subscriber $0.00347 per piece of content.
|No. of TV Shows||No. of Movies||Total Library Size||Cost Per Month Standard (Local)||Cost Per Month Basic ($)||Cost per Title Standard ($)|
Turkey has the cheapest subscription rate at $3.27 a month while Denmark has the most expensive at $12.37.
In 2014, Netflix ruled the US OTT market with a 90% market share. Five years on, and eMarketer forecasts Netflix will end 2019 with an 87% market share. It still enjoys a huge lead over Amazon Prime Video with 93.5 million viewers and a near 53% penetration rate. Hulu will end 2019 with 75.8 million viewers and a penetration rate of 41.5%.
Many OTT subscribers have multiple accounts with different providers that make the total values go beyond 100%. The chart below shows a comparison of subscriber numbers of major players in the streaming industry.
Amazon Prime Video
Source: eMarketerDesigned by
Apple TV and Disney+ joined the increasingly crowded OTT space in November 2019. Aggressive marketing and lower monthly subscription plans have propelled Apple TV and Disney+ with subscribers jumping ship from Netflix.
Disney+ has signed up more than 10 million subscribers a day after it launched on November 12. Industry analysts estimate Netflix lost 1 million subscribers who canceled their subscriptions after signing up for Disney+. Some good news for Netflix would be the fact Disney+ only offers a 7-day trial and a number of those 10 million who signed up will not convert to paid subscriptions afterward.
Apple TV has not released its subscription numbers yet. Although they offer the lowest subscription rate compared to other services, their content assets are limited—10 shows with about 10 episodes each.
Five other streaming services are set to launch in 2020 giving Netflix even more competition.
The content wars are only beginning. Disney has the combined content assets from Disney, Pixar, ABC, Marvel Studios, Lucasfilm, Touchstone Pictures, Fox, and 50% equity holdings in A&E, History Channel, and Lifetime. Even if Disney does not produce new content for the next five years, it still won’t run out of films and TV shows to stream.
$8.8 billionCBS Viacom
Source: MoffettNathanson, Company ReportsDesigned by
As of June 2019, Netflix USA had 5,879 titles in its library. The number will fluctuate in the coming months, content will be removed because licensing agreements have lapsed. Another reason for a diminishing library is competition—Disney+, NBCUniversal, and WarnerMedia have plans to launch their own streaming services in 2020.
Netflix has raised an additional $2 billion in funding to beef up its content library with more original content. Netflix currently has a library of 850 original content assets. The new titles amount to about 1,500 hours of streaming.
Broken down by genre and show type, TV series make up two-thirds of the content assets. Surprisingly, stand-up comedy series make up just 1%, tied with talkshows.
Netflix originals are a mix of genres and quality; some banking on star power, others on formulaic plots, and some on story-driven plots worthy of acclaim. These original assets have amassed a combined 188 nominations and 51 wins from various award-giving bodies as of July 2019.
|Awards Body||Number of Nominations||Wins|
Birdbox is Netflix’s most viewed originally produced movie to date, garnering 80 million views; Stranger Things is the most-watched original series with 64 million views.
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