As part of its investors call on Tuesday, Netflix surprised everyone with news – that it’s “very close” to becoming a cash-flow-generating company and will no longer need external financing reports Bloomberg.
In other words, Netflix is set to become legitimately profitable in the SVOD space – a feat almost no-one has actually achieved. The company, which has been known for years for burning through cash and continuous borrowing, also signalled they may buy back stock in the future – something they haven’t done in a decade.
The company, now sitting on a market value of nearly $250 billion, has been building up its programming library at a breakneck pace. As a result, they have been uniquely prepared to not just weather through but thrive during the COVID-19 crisis while more traditional media companies have often been left scrambling.
In the fourth quarter of 2020, Netflix managed to add a further 8.5 million subscribers even with price hikes and stiff competition, surpassing estimates both within the U.S. and internationally. That brings up its membership to over 200 million worldwide, with nearly 37 million of that total joining in 2020.
Intriguingly the report indicates 40% of Netflix’s ‘new’ members were actually re-subscribers, and rival Disney+ saw a similar 45% of its Q4 subscribers being re-subscribers – many of those likely drawn to the second season of “The Mandalorian”.
This definitely indicates consumers are trying out different services and will cut out and then re-subscribe when there’s new material to watch.
