In a letter to investors, Netflix announced that it passed 200 million paid members in 2020. The streaming service gained 8.5 million new subscribers in the fourth quarter alone and 37 million over the whole year – a record for the company. The biggest jump in sign-ups occurred in March when countries began implementing lockdowns to tackle COVID-19.
Netflix said that the revenues it generated meant that it believes it no longer needs to "raise external financing for our day-to-day operations". For 2021, it expects that free cash flow will be around break-even. As it generates excess cash, it will explore returning money to shareholders via stock buybacks as it did between 2007 and 2011.
Regarding the explosion in new streaming providers, Netflix said that its strategy going forward is simple; it wants to “improve Netflix every day to better delight our members” to become their first preference for a streaming provider.
To "delight" its users, it'll need enticing content to watch on the platform. According to data from Google, 90% of the top ten searched for TV shows were on Netflix but only 20% of the top ten movies were on the platform. To boost appeal for those who prefer films, the company said that it’s going to release one new original film every week during 2021.
Going forward, Netflix believes it will add six million new customers in the first quarter, a drop year-on-year due to the lockdowns which caused a big spike. The predictions of further growth caused its share price to rocket from $502 to $563 at the time of writing.
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