Disney+ becomes Netflix’s main competitor.

Editor’s note: This article is from the micro-channel public number “different concept of Finance” (ID: DifferentFin), Author: ghosts ghosts before.

On Tuesday, Eastern Time, global streaming media entertainment service provider Netflix (NASDAQ: NFLX) released its fourth quarter and full-year earnings report for 2020 as of December 31, 2020.

According to the financial report, Netflix’s fourth-quarter revenue was US$6.64 billion, slightly higher than the market’s expected US$6.63 billion.

According to the financial report, the growth of subscribers in the fourth quarter exceeded expectations, with a net increase of 8.51 million, higher than market expectations of 6.06 million. Global streaming media service paid users exceeded the 200 million mark.

In addition, Netflix plans to achieve cash flow neutrality in 2021, and maintain positive cash flow every year after 2021. External financing will no longer be required, and stock repurchases will be considered.

The growth of Netflix’s subscription users far exceeded expectations and the cash flow outlook was boosted, driving Netflix’s stock price to rise 12.27% in after-hours trading to $563.32.

(Tencent self-selected stock screenshot)

New crown epidemic pushes Netflix to break the 200 million mark of paying users

In 2020, global public health events gave birth to the “home economy”, which made Netflix a “beneficiary stock” of the epidemic. Affected by the new crown epidemic, people are forced to stay at home and offline entertainment activities are restricted. This has “achieved” Netflix and promoted a skyrocketing number of Netflix users.

Financial data shows that as of December 31, 2020, Netflix has 203.66 million paying members for its global streaming media service, breaking the 200 million mark, which is an increase of 22% from 16709 million in the same period last year.

In 2020, the increase in the scale of paying users will promote the growth of the company’s revenue, and at the same time, the company’s share price will skyrocket, providing investors with strong income.

Netflix’s core strategy is to develop its streaming membership business globally, which is also the company’s main source of income.

Global streaming media paid membership is a key indicator to measure Netflix. This indicator measures the number of global users who have registered and paid to subscribe to receive streaming media services.

In general, the first quarter of each year andThe fourth quarter was the peak period for Netflix’s user growth. However, in 2019, the growth rate of Netflix’s paid subscribers showed negative growth.

(Data source: Netflix financial report)

Benefiting from the “home economy” spawned by the new crown epidemic, Netflix has changed the trend of negative growth in paying subscribers.

In the first nine months of 2020, the growth of Netflix paid membership users exceeded that of the entire year of 2019. For the whole year of 2020, Netflix added 37 million paying users, an increase of 31% from the 27.8 million paying users net added for 2019.

However, data from SimilarWeb shows that Netflix’s website visits in North America are showing signs of slowing down, but international visits continue to rise.

In December last year, the average monthly number of unique visitors from the United States and Canada (UCAN) dropped to 57.9 million, a 4% drop from the peak in August last year. However, International Access Network reached a new high of 140.5 million, an increase of 10% from the peak in September last year.

This reflects to a certain extent that Netflix’s domestic paying users have reached the ceiling, and the growth of paying users is mainly concentrated in the Asia-Pacific and Europe, Middle East and Africa regions.

According to the financial report, in the fourth quarter of 2020, Netflix’s global streaming video service has a net increase of 8.51 million paying users, which is lower than the net increase of 8.76 million in the same period last year.

Among them, the number of paying users of streaming media services in the United States and Canada (UCAN) was 73.94 million, a net increase of 860,000, higher than the net increase of 550,000 in the same period last year;

The number of paying users for streaming video services in Europe, Middle East and Africa (EMEA) was 66.7 million, a net increase of 4.46 million, higher than the net increase of 4.42 million in the same period last year;

LATAM has 37.54 million paid subscribers for streaming video services, a net increase of 1.21 million, which is lower than the net increase of 2.04 million in the same period last year;

The number of paying users for streaming video services in the Asia-Pacific region (APAC) was 25.49 million, a net increase of 1.99 million, higher than the net increase of 1.75 million in the same period last year.

A survey of smart phone users by a smart application company shows that Netflix is ​​currently the most popular streaming media service platform in Korea. As of the end of last year, Netflix had 7.58 million users in South Korea and 4.1 million paying users.

PayThe increase in the number of fee users has also driven the company’s revenue and net profit growth.

Based on Netflix’s historical financial data, its quarterly revenue growth rate has maintained a relatively stable growth year-on-year. The financial report shows that for the whole year of 2020, the company’s receivables are 24.996 billion US dollars, an increase of 24% from 2019’s 20.156 billion US dollars; net profit is 2.761 billion US dollars, compared with 2019’s 1.867 billion US dollars, an increase of 47.9%; diluted earnings per share 6.08 US dollars, last year was 4.13 US dollars.

In the fourth quarter of 2020, Netflix achieved revenue of US$6.644 billion, an increase of 21.5% from US$5.467 billion in the same period last year, and an increase of 3.2% from the previous quarter; net profit was US$542 million, compared with the same period last year. A decrease of 7.7%; diluted earnings per share was 1.19 US dollars, compared with 1.3 US dollars per share in the same period last year.

By business department:

The revenue from streaming video services in the United States and Canada was US$2.98 billion, an increase of 12% year-on-year and a month-on-month increase of 1.6%.

The revenue from streaming video services in Europe, the Middle East and Africa was US$2.137 billion, a year-on-year increase of 37% and a month-on-month increase of 5.8%.

Revenue from streaming video services in Latin America was US$789 million, an increase of 6% year-on-year, which was the same as the previous quarter.

Revenue from streaming video services in Asia Pacific was US$685 million, a year-on-year increase of 64% and a month-on-month increase of 8%.

Based on the above data, the Asia-Pacific region is the region where Netflix’s streaming media service revenue grows, followed by Europe, the Middle East and Africa, which is in line with the growth trend of Netflix’s paying subscribers.

Intensified competition, Netflix will be under pressure on multiple financial indicators in 2021

The continuous spread of new crown virus pneumonia around the world has severely hit offline theaters. At the same time, the market’s demand for streaming media is increasing day by day. This has also attracted Disney+, Apple TV+, and Warner backed by AT&T (American Telephone and Telegraph). Giants in the group’s HBO Max, Amazon Prime, Universal Pictures technology and film and television sectors entered the game.

The influx of giants is bound to make the streaming media industry more fierce. Netflix’s core strategy of developing its streaming membership business on a global scale is facing various challenges.

From the perspective of the total number of subscribers to the streaming media platform, Netflix can be said to be far ahead, but in terms of attracting new users and high-quality IP, Disney and others cannot be underestimated.

On November 12, 2019, Disney launched Disney Plus with a monthly fee of $6.99. Five months later, the number of users exceeded 50 million. You know, it took Netflix 7 years to reach thisThe number of users of this size. According to media reports, as of December 2, 2020, Disney+ has 86.8 million paying members.

Looking back at Netflix, on the premise of enjoying the epidemic dividend, Netflix added 37 million paid members to streaming media throughout 2020. And Disney+ has been online for a little more than a year, and it has also enjoyed the 2020 epidemic dividend. Disney+’s paying users have increased by more than 80 million, far exceeding the scale of Netflix’s new paying users.

In response to the increase in the scale of Disney’s paid users, Spencer Wang, vice president of investor relations at Netflix, said that of Disney’s 87 million users, about 30% come from Hotstar, which is a streaming platform launched by Disney in India. The average income of American users is low.

The global media research company Nielsen once stated in its “Tops of 2020” research report that of the 10 most streamed movies last year, 7 were broadcast on Disne+ in November 2019.

At the same time, data from market research companies show that the overall streaming media ratings have also changed. Netflix only accounts for 28% of the time users spend streaming media, which is lower than 31% in 2019, and Disney accounts for about 6%. .

Judging from the current slow promotion of the epidemic and the continued spread of the global epidemic, all streaming media platforms may continue to benefit from consumers’ home-stay economy. For streaming media platforms, in addition to the core element of subscriber scale, another factor that drives the growth of platform revenue and net profit is per capita charges.

The monthly fee for Disney+ launched by Disney in 2019 is US$6.99. Disney has revealed that it will increase the monthly fee for streaming media subscriptions from March 2021; Warner Media launches HBOMax streaming media, priced at US$14.99; Amazon Prime Video Streaming media services are also provided at a cost of US$119 per year; according to media reports, the AppleTV+ free trial period will be extended to July 2021.

The information on Netflix’s official website shows that the current membership price is divided into 8.99 USD/month and 15.99 USD/month. Netflix’s pricing is relatively high for price-sensitive users, which will have a certain impact on repurchasing by more subscribers.

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