(qlmbusinessnews.com via theguardian.com – – Tue, 18 July 2017) London, Uk – –
Netflix has topped 100m subscribers, adding more than 4m outside the US in the past three months as international expansion continues to drive the TV streaming service’s growth.
The company’s share price climbed almost 10% to $180-a-share (£138) in after-hours trading in New York on Monday after its better-than-expected trading update for the three months to the end of June. This pushed the company’s market capitalisation up to $78bn.
The company – which is worth the equivalent of almost nine ITVs or 1.5 times the size of Rupert Murdoch’s 21st Century Fox in market value terms – added 5.2m subscribers in the second quarter. This is traditionally Netflix’s slowest time of the year with it averaging growth of less than 2m in the quarter over the last five years.
Most of the growth (4.14m of the new users) came from international subscribers lured by Netflix’s combination of new shows such as The Crown and Stranger Things, plus its stalwarts House of Cards and Orange is the New Black continuing to prove their global popularity.
The figures marked a milestone for Netflix, which was founded in the US 20 years ago, with its international business accounting for more than half of total subscriber numbers for the first time.
The boom in international growth followed Netflix launching in 130 countries last year, with more than 52m of its 104m subscribers coming from outside the US. Only a handful of countries including North Korea, China and Syria do not have the service.
“Our streaming membership grew more than expected, from 99m to 104m, due to our amazing content,” said Reed Hastings, chief executive of Netflix, in a letter to shareholders. “We also crossed the symbolic milestones of 100m members and more international than domestic members. It was a good quarter.”
Netflix has committed $6.6bn (£5bn) to making and acquiring TV shows and films this year, with a bill of $15.7bn committed over the next five years.
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Perhaps worryingly for rivals, Hastings said the company would look to invest even more in content as its hit shows prove to be a commercial and creative success.
“With our content strategy paying off in strong member, revenue and profit growth, we think it’s wise to continue to invest,” he said. “In continued success, we will deploy increased capital in content, particularly in owned originals.”
It emerged last week that Netflix nearly doubled its Emmy nominations this year, with 91 compared with 54 last year, for 27 titles including The Crown, Stranger Things and Master Of None.
Only HBO, on which Netflix has based its model, fared better with 111 nominations. HBO spends about $2bn annually on content, with Amazon about $4.5bn, according to unofficial analyst estimates.
Recently, Netflix has culled a slew of under-performing shows, from Baz Luhrmann’s big budget The Get Down to high-concept sci-fi Sense 8, to better balance viewer interest with climbing programme costs.
Hastings said that while there is furious competition between Netflix and other subscription on-demand TV services, from digital rivals such as Amazon and Hulu to those of traditional broadcasters such as Sky and the BBC, he does not believe his company is killing their businesses.
“It seems our growth just expands the market,” he said. “The largely exclusive nature of each service’s content means that we are not direct substitutes for each other, but rather complements.
“Creating a TV network is now as easy as creating an app, and investment is pouring into content production around the world. We are all co-pioneers of internet TV and, together, we are replacing linear TV. The shift from linear TV to on-demand viewing is so big and there is so much leisure time, many internet TV services will be successful.”
Netflix said that it believes its growth momentum will continue but has issued more conservative guidance for the third quarter, forecasting about 4.4m new subscribers. About 3.65m are estimated to come from international markets.
By Mark Sweney