Shareholders in Netflix will be very pleased with this quarter’s earnings report.
Over the last three months, Netflix has added a whopping 5.3m new subscribers, exceeding the expectations of analysts. Compared to last year’s figures, global Netflix memberships are up 49pc.
In its report for the third quarter of 2017, the company said it was “growing nicely across the world”, on track to exceed $11bn in revenue in 2017.
Big jump in international streaming
International streaming has taken a massive leap since the same quarter of 2016, generating a 33pc increase year on year. This was stoked by a 24pc increased in average paid memberships. For Netflix, the primary focus is on boosting the growth in its global operations as it already hit its 2020 US contribution margin of 40pc in Q1 2017.
The company also said it spends disproportionately on promotions in the US to “to generate media and influencer awareness for our programming, which we believe, in turn, is an effective way to facilitate word of mouth globally”.
Netflix planning more original content
Netflix also discussed its original content strategy, which it has been working steadily on since 2012. It is firm in its plans to focus on generating new shows to mirror the success of Orange is the New Black and Narcos, among others.
“Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes.”
It looks like Netflix will spend between $7bn and $8bn on in-house programming next year. For 2018, original content will represent more than 25pc of total programming spending and that “will continue to grow”.
It also mentioned major deals with Shonda Rhimes (creator of Grey’s Anatomy and Scandal to name but a few) and comic-book writer Mark Millar’s Millarworld.
“Our goal is to work with the best creators in the world and own the underlying intellectual property so that we can continue to deliver amazing content to our members across the globe.”
In terms of competition from the likes of Disney and Amazon, Netflix said it has a “good head start but our job is to improve Netflix as rapidly as possible to please our members by earning their viewing time, and to stay ahead of the competition in the decades to come”.
Updated, 11.11am, 17 October 2017: This article was updated to clarify that Netflix original content will represent 25pc of total programming spend in 2018, not 2017.