At the Morgan Stanley Technology, Media & Telecom Conference, Netflix CFO Spencer Neumann said that the company still has upside despite already being “55% penetrated” in the U.S. market.
“I mean, even if we look at Q4 of this past year, we grew in the U.S. one, we grew the top line considerably, right? So we accelerated revenue growth for our company overall and in the U.S. Our member growth, we had our — first, we had quite a bit of pricing growth in the U.S. last year.”
Neumann said that despite the fact that the company didn’t grow as much in Q4 as it did the prior year, they had 17% ARPU growth. He felt that even single digit user growth was encouraging despite the price increases. He feels that member satisfaction though is a “a good indication for that is member viewing.”
“And what we talked about in Q4 is that even in the U.S. in Q4, with all that noise in the system, that member engagement grew year-over-year at similar levels to the prior year. So I mean, it’s a good sign for us that it’s encouraging that we still have runway to grow in the U.S., and that’s what we’re going after.”
In their Q4 earnings, Netflix announced that they had 61 million U.S. subscribers (up 420,000) and surpassed 100 million internationally for the first time (up 8.33 million). The growth came in the quarter where Disney+ added 26.5 million subscribers over the same time period.
Overall though, Neumann feels that most of the growth is still coming form international markets, where the company is less than 10% penetrated in some of their biggest markets like Asian-Pacific region.
“Outside (of) China, (there’s) about 800 million broadband households, about 800 million pay-TV households. We’re at about 167 million paying members at the end of last quarter, ranging from a little over 50% penetrated in the U.S. to less than 10% penetrated in the APAC region. So we still think we’ve got just a long way to go to build a company, a multiple of our current size.”