Netflix (NFLX, Financial) continues to enhance its long-term competitive position with the industry’s largest commitment of investment dollars in exclusive and original content. Given its still-low global penetration and the accelerating shift from linear TV, Netflix still has significant room for growth. We expect the ramp up in original shows with established audiences and new series will lead to a reacceleration in subscriber growth. In the fourth quarter, the company’s global subscriber base grew 20% to 167 million, and global average revenue per user increased roughly 9%. Global net subscriber additions, at 8.8 million, surpassed consensus expectations. In an expected tough quarter from a competitive standpoint, given the launch of Disney+ in the U.S., Netflix grew its U.S. subscribers by roughly 1% at prices nearly 20% higher than a year ago, indicating, we believe, the resilience of the Netflix business model.
From Spiros Segalas (Trades, Portfolio)' Harbor Capital Appreciation Fund first-quarter 2020 shareholder commentary.
