Netflix added 8.3 million subscribers in its latest financial quarter, falling below the streaming giant’s expectations of a net subscriber add of 8.5 million.
As stated in a shareholder letter last quarter, Netflix was expecting to significantly underperform in Q4 compared with growth seen between 2017 and 2020. The streamer ended 2021 with a total of 222 million paid subscribers, adding just 18 million new paying subscribers during the year compared with the 37 million gained in 2020.
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In a letter to shareholders Thursday, Netflix acknowledged that “added competition” from other companies with streaming services “may be affecting [Netflix’s] marginal growth some” but noted that Netflix has continued to grow in regions where other competitors have launched.
“This reinforces our view that the greatest opportunity in entertainment is the transition from linear to streaming and that with under 10% of total TV screen time in the U.S., our biggest market, Netflix has tremendous room for growth if we can continue to improve our service,” the letter said.
As the streamer continues to expand globally, in part thanks to international hits like Squid Game, Netflix has seen more growth in regions like the Asia Pacific and Europe, the Middle East and Africa. But in recent quarters, growth has stalled in the U.S./Canada region, with Netflix losing some 400,000 subscribers at one point in Q2 but regaining some of those losses in Q3. In the Thursday shareholder letter, Netflix noted that 90 percent of its paid subscriber adds were coming from outside of the U.S. and Canada region.
With the decline in growth in U.S./Canada, however, Netflix appears to recognize it has maxed out its potential in the region and is instead focusing on maximizing its average revenue per user with a recent price hike that will see Netflix’s standard plan, the most popular option, costing more than HBO Max at $15.49 per month.
Heading into the first quarter of 2022, Netflix set a low forecast of 2.5 million subscriber adds, which the company attributed to a “back-end weighted content slate” due to the March releases of the second season of Bridgerton and The Adam Project.
As for its 2021 content slate, Netflix said season two of The Witcher was its top series title released in the fourth quarter, raking up 484 million hours of viewing worldwide in its first 28 days, while Maid (469 million hours) and season three of You (468 million hours) also had strong showings. (The company switched to total hours viewed as its primary metric in October, moving away from a previous two-minute “view” standard.) Netflix also noted — as it has on its Top 10 website — that Squid Game, released late in the third quarter, is its most-watched series ever. The Korean series amassed 1.65 billion hours of watch time worldwide in its first four weeks of release.
Netflix’s top feature film in the quarter was Red Notice; the action comedy starring Dwayne Johnson, Gal Gadot and Ryan Reynolds drew 364 million hours of viewing in four weeks. Hot on its heels, however, is Adam McKay’s Don’t Look Up, which as of Jan. 18 — 26 days after its streaming debut — had 353 million hours of viewing time.
In 2021, the streamer also made a concerted push forward with a mobile gaming expansion, releasing its first slate of games worldwide in early November with two Stranger Things titles and three others created by the developers Amuzo, Rogue Games and Frosty Pop not long after its acquisition of the Oxenfree game developer Night School Studio. On Jan. 18, Netflix released another card adventure title made by Rogue Games, Arcanium: Rise of Akhan.
In a prerecorded earnings interview Thursday, Netflix COO Greg Peters said the company is “open to licensing, accessing large game IP that people will recognize” beginning this year, in addition to creating its own games based on Netflix franchises.
Rick Porter contributed to this report.