Netflix earnings: APAC drives 80% of new subscriptions

The company added 1.46 million subscribers from Asia-Pacific in the most recent quarter, according to results released on Tuesday, out of a total of 1.75 million. (Subscriber growth still came in below analyst expectations of 2.41 million.)

Netflix’s other three regions reported minimal growth. The company only added 100,000 subscribers in the U.S. and Canada, and 640,000 subscribers in the Europe, Middle East and Africa (EMEA) region. The company even lost 450,000 subscribers in Latin America, which Netflix blamed on its password-sharing crackdown.

In fact, Netflix’s Asia-Pacific subscribers have grown at a steady and consistent pace over the past several quarters. According to its earnings, the streaming service has added at least a million new subscribers from Asia-Pacific over each of the past five quarters. 

By comparison, other regions can report wild fluctuations in subscriber growth from quarter to quarter. Netflix’s EMEA subscribers fell by 770,000 in the second quarter of 2022, only to surge by 3.2 million two quarters later.

Over the previous five quarters, Netflix added 10.7 million paying subscribers, of which 6.9 million, or 64%, come from Asia-Pacific. 

Still, the boost in Asian subscribers may not help Netflix’s bottom line that much. Asia-Pacific is still the service’s smallest region overalll, with 39.5 million subscribers, behind 41.3 million in Latin America, 74.4 million in the U.S. and Canada, and 77.4 million in EMEA.

The region has the lowest revenue per membership across the service’s four regions, according to its earnings. Netflix earns just $8.03 per subscriber in Asia-Pacific, compared to $16.18 from subscribers in the U.S. and Canada. Average revenue per subscriber in the region even dropped year-on-year, which Netflix blamed on “member growth in countries with lower pricing.”

Netflix is relying on Asia not just as a consistent source of new subscribers, but also a source of new content, especially after the success of South Korean-made Squid Game in 2021. In January, Netflix said it planned to roll out 34 new and returning shows from Korea this year, after 60% of the company’s subscribers reported watching at least one Korean-made show in 2022.

The streaming company is also investing in Japanese anime. The company claimed that half of its subscribers, and 90% of its Japanese subscribers, watched at least one anime program in 2021. In March, Netflix announced a live-action adaptation of pirate-themed anime One Piece, based on the world’s best selling manga series.

Netflix earnings

Netflix reported $8.1 billion in quarterly revenue on Tuesday, a 3.7% year-on-year increase.

Netflix also announced that it was delaying its password-sharing crackdown to the next quarter. The streaming company has announced that it would stop users from sharing passwords, blaming it for sluggish subscriber growth.

The company is currently testing its password sharing crackdown in Canada, New Zealand, Portugal, and Spain. On Tuesday, Netflix claimed its new system of “paid sharing” in Canada was a success, saying that Canadian revenue was “now growing faster than in the U.S.”

Netflix also announced it was ending its DVD rental business, the service that originally launched the company. 

Shares in the streaming company plunged by over 10% immediately after Netflix released its earnings, yet recovered as after-hours trading continued.