Earnings

Nearly half of Netflix’s new subscriber growth came from Asia-Pacific

Indian commuters travelling past large billboards in Mumbai for ‘Sacred Games’, Netflix’s first original Indian series. The streaming giant is locked in a battle with Amazon Prime for a slice of India’s fast growing on-demand video market.

INDRANIL MUKHERJEE | AFP | Getty Images

Netflix subscribers in the Asia-Pacific (APAC) region were the largest contributor to the streaming giant’s paid membership growth for the first time.

For the third quarter, the company said 46% of global paid net adds came from APAC, the greatest share of any region. However, total global paid net subscriber additions were only 2.20 million, well short of analysts’ expectations, and the stock dropped in after-hours trading.

International expansion has been a key focus for Netflix, with Asia in particular seen as a critical region by management.

While Netflix does not operate in China, it has flagged the likes of India and Japan as countries it is targeting. Part of its strategy has been to create shows that appeal to the local audience, but still have a more global appeal.

Hindi-language drama “Sacred Games” featuring high-profile Bollywood actor Saif Ali Khan is an example of that. As is Japanese original “The Naked Director.”

Netflix was forced to suspend production in many parts of the world due to the coronavirus pandemic which has delayed the release of some shows. But in its second-quarter earnings report, it said that it had resumed production and was “furthest along” in Asia Pacific.

The pandemic has also forced people to stay at home, which has benefited Netflix as consumers watch more content. During the first half of the year, Netflix reported a massive surge in subscribers that blew analyst estimates out of the water.

While management has cautioned that the pandemic has made it difficult to accurately predict future subscriber growth, Netflix in July said it expected 2.5 million net subscriber additions for the third quarter. Analysts had been more optimistic, projecting 3.57 million net adds, according to FactSet consensus estimates.

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