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Pastimes : Television and Movies

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From: LindyBill	1/19/2021 9:44:45 PM
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wsj.com Netflix Delivers a One-Two Punch Dan Gallagher The Netflix series ‘Cobra Kai’ is based on the 1984 movie ‘The Karate Kid.’ Photo: Netflix Your browser does not support the audio tag. Listen to this article 2 minutes This feature is powered by text-to-speech technology. Want to see it on more articles? Give your feedback below or email audiofeedback@wsj.com. All its years in Hollywood have clearly taught Netflix NFLX 0.76% the value of tweaking the screenplay. Wall Street’s script for Netflix has been simple to date: a singular focus on user numbers. And the streaming giant has clearly delivered on that recently, thanks in part to the pandemic that confined people to their homes. The company said Tuesday that it added a record 36.5 million paid subscribers in 2020, with fourth-quarter additions of 8.5 million subscribers beating its own projection by 42%. Over the previous five years, Netflix had averaged about 22.5 million paid subscriber additions annually. Come DownNetflix net new paid subscribers per quarterSource: the companyQ1 of 2021 is a projection .million 2016’17’18’19’20’210.02.55.07.510.012.515.017.5 But the unique circumstances of Netflix’s recent pace mean it is very unlikely to continue. Indeed, Netflix projected only 6 million subscriber additions for the first quarter, matching the low end of Wall Street’s forecasts. But the company offset the disappointment with the target of breaking even on a free-cash-flow basis this year, compared with its earlier projection of burning as much as $1 billion. The company even bolded a claim in its quarterly letter to shareholders that it believes it will no longer need to raise external financing for its day-to-day operations. Its shares were up more than 13% following the report. The reaction suggests Netflix and its investors are ready to grow up a bit. The company has burned cash since 2013 in a race to build up exclusive content on the correct assumption that studios that produced top-flight programming would eventually create their own streaming outlets. That has played out vividly over the past 18 months with the launch of services such as Disney+, HBO Max and Peacock. New rivals also have cost Netflix access to popular comfort-viewing programs such as “Friends” and “The Office.” Fortunately, Netflix now has plenty of popular shows of its own. Moreover, the company’s tenure in streaming gives it unique insight into what audiences actually want to see. Who else would have given the green light to a hit show with washed-up “Karate Kid” characters? Write to Dan Gallagher at dan.gallagher@wsj.com Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8 Appeared in the January 20, 2021, print edition as 'Netflix Tempers Subscriber Outlook With a Surprise.'

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