Netflix faces growth pressure in Canada as it picks up 125,000 new subscribers
This Jan. 29, 2010 file photo, shows the company logo and view of Netflix headquarters in Los Gatos, Calif. Netflix Inc. (Marcio Jose Sanchez/AP Photo)
David Friend, The Canadian Press
Published Tuesday, January 21, 2020 10:42PM EST
TORONTO - Netflix recruited more Canadian subscribers in the final months of last year as it responded to an onslaught of new competition from Apple TV Plus and Disney Plus with an array of buzzworthy TV series and Oscar-calibre movies.
The global streaming company attracted 125,000 paid sign-ups in Canada during the fourth quarter that ended Dec. 31, 2019, helped by popular TV series “The Witcher” and acclaimed films “Marriage Story” and “The Irishman.”
Yet, while the results were an improvement over the 96,000 Canadian subscribers who joined in the third quarter, the company's subscriber growth was down from the 218,000 new members who joined during the last three months a year prior.
Part of that slowdown could be attributed to the arrival of both Apple and Disney which launched their hyped streaming services within days of each other. Disney Plus, in particular, left a solid impact on pop culture when its Star Wars spinoff “The Mandalorian” sparked an obsession with viewers over the so-called Baby Yoda character on social media.
Netflix says despite the widespread attention both new streaming platforms attracted, there was a “more muted impact from competitive launches” outside the U.S., including in Canada.
Reed Hastings, the company's chief executive, downplayed the arrival of Apple and Disney, saying in a call with investors that before they showed up a formidable competitor for viewership already existed in global powerhouse YouTube.
Spencer Wang, the company's vice-president of finance, suggested the notion of the streaming wars is overplayed by outsiders.
“I know it's exciting for folks to talk about - you know the clash of the titans and all that kind of stuff - but really the big thing that's going on is a transition from linear entertainment to streaming on demand entertainment, which is really, really big,” he said.
“It's very similar to the transition the industry went through from broadcast to cable.”
The latest Canadian figures were outlined as part of a broader commitment to provide its investors with a more extensive quarterly report that fleshed out data on growth in key countries. More detailed breakdowns of its regional membership numbers and revenue cover four regions - Asia-Pacific; Latin America; Europe, the Middle East & Africa; and U.S. and Canada.
The North American region was the lowest membership growth area for the streaming company, which it attributed in its financial report to “recent price changes and to U.S. competitive launches.”
Canadian revenues were higher at US$241 million in the three months that ended Dec. 31, 2019, marking an increase from nearly $164.9 million in the same period a year earlier when the company was phasing in a price increase with users across the country.
Overall, Netflix added 8.8 million worldwide subscribers during its fourth quarter, surpassing expectations.
Netflix had said it expected to add 7.6 million subscribers, and analysts thought the service would fare even better. The increase pales slightly next to the 8.9 million subscribers the service added in the fourth quarter of 2018.
A report released Tuesday by the Canadian Radio-television and Telecommunications Commission on the state of the country's communications industry offered further insight into the popularity of Netflix in Canada.
The 2019 Communications Monitoring Report outlines that subscription-based video-on-demand services - which include Netflix, Crave and Quebec-based Club Illico - generated $2.5 billion of revenue for the entirety of 2018. Netflix was by far the largest chunk of those revenues, representing 65 per cent, while Amazon Prime Video came in a distant second with an eight-per cent share of total revenues.
- with files from The Associated Press
This report by The Canadian Press was first published Jan. 21, 2020.