Technology

‘‘We’ve had the same strategy for 20 years: Please our members and they help us grow,’’ Netflix’s chief executive, Reed Hastings, told investors this week. How’s that working out for Netlfix? Really well. Netflix posted impressive figures for the last three months of 2019, adding 8.76 million subscribers worldwide, taking the total number of paying Netflix subscribers above 167 million.

Here are some more numbers: Netflix reported a fourth-quarter profit of US$586.9 million (NZ$889.5m) or US$1.30 a share. And revenue over the quarter was up 31 per cent to US$5.47 billion.

The positive news saw Netflix’s share price jump a whopping 2.3 per cent in after-hours trading. But that’s only half the story.

The wider narrative here will be even more pleasing to Netflix and its investors. That’s because the quarterly results exceeded expectations against the ‘‘streaming wars’’ backdrop.

And this is a massive deal. Streaming wars was supposed to be a challenging time for Netflix. Not only was the market a lot more crowded, but it also faced a new problem. Where would it get its content?

In previous years, all Netflix had to do was outbid Amazon or TV networks for the rights to the latest film or TV series.

The arrival of Disney Plus, Apple TV Plus late last year, with WarnerMedia readying HBO Max for a May launch too, made Hastings’ ‘‘please our members’’ strategy that much more challenging.

The fact Netflix has managed to post growth figures while offering a service that lacks family-friendly Disney films and WarnerMedia favourites like Friends cannot be understated.

Netflix deserves credit for managing to attract millions of new customers, up 20 per cent year-on-year, with homegrown content.

Exclusive big-name shows like The Crown, The Witcher and Martin Scorsese’s The Irishman, featuring an all-star cast of Robert De Niro, Al Pacino and Joe Pesci, will have contributed to its growth for the quarter. Netflix has also collected plenty of award nominations, and wins, along the way.

Netflix, it would appear, is having a good war.

However, a closer look at the 8.76 million new subscribers suggests a slightly different narrative. Netflix actually added 8.3 million of that number from its global audience, beating its expectations by 551,000 users.

Its domestic performance (the US and Canada) wasn’t quite as strong, adding only 550,000 new customers versus a forecast of 589,000.

The geography of Netflix’s gains is important here because the market with the stiffest competition, the US and Canada, is also the market where it failed to meet its expectations.

Netflix hasn’t felt the effects of the streaming wars on a global level yet.

Yes, Apple TV launched worldwide on November 1, but its library is woefully thin right now. By my count, it only offers 13 different titles. And I’m not sure that’s enough to make anyone consider cancelling anything.

Disney Plus, on the other hand, has been impressively slow with its rollout. It’s only available in six countries, the US, Puerto Rico, Canada, the Netherlands, Australia and New Zealand.

Disney is launching in the United Kingdom, Ireland, Germany, Austria, Italy and Spain in March. But, even this could be a soft launch as Sky TV is reportedly unwilling to cut short its broadcasting contract with Disney. Meaning that when it does launch in those territories in a couple of months, it will be doing so with smaller libraries.

The war has just begun.

Netflix hasn’t felt the effects of the streaming wars on a global level yet.