Amazon and Apple have a lot to fear after latest Netflix earnings

17 Oct 2018

Netflix app. Image: aa-w/Depositphotos

Netflix has published its latest earnings report, outpacing expectations as it consumes even more of the streaming market, leaving rivals in its wake.

Netflix being synonymous for content streaming looks set to continue for the foreseeable future after its latest earnings report for Q3 of this year.

According to CNBC, the company’s shares soared by 15pc after it considerably exceeded expectations thanks to accelerated growth. Most notably, the company’s streaming revenue jumped by 36pc this quarter compared with the same time last year.

Subscriber numbers were significantly higher than expected, too, with more than 1m added in the US versus an expected 673,800, while international subscribers rose 5.87m versus an expected 4.46m. Netflix now expects a further 9.4m to be added in Q4.

While the $4bn Netflix made in the quarter is in line with estimates, the fact that new subscriber numbers far exceeded estimates will be music to shareholders’ ears.

Better payback from own shows

As it has always aimed to do, Netflix will continue to push its own TV and film studios to create its own content rather than relying on licensing outside content. For example, the platform is set to launch the second season of Making A Murderer, a show that gathered a global following and contributed greatly to viewing figures when the first season launched.

“Our own original shows tend to be more valuable than licensing someone else’s shows in later windows,” said Netflix’s chief content officer, Ted Sarandos.

“So, when we invest in an original show, we find, we’re having a better payback in terms of people watching and appreciating Netflix and valuing their subscription. So that’s why we’re leaning in that way.”

Netflix also announced that it plans on spending $1bn on producing new content over the next 10 years, bolstered by a new production hub to open in the New Mexico city of Albuquerque.

All of this marks a noticeable shift from the previous quarter when the earning report resulted in falling shares. This was brought on by figures showing subscriber growth rate had stalled, but this quarter’s figures have likely been aided by the release of a string of new TV series and movies.

Netflix app. Image: aa-w/Depositphotos

Colm Gorey was a senior journalist with Silicon Republic