This week, Netflix released its Q3 financial records, and the streaming service added 3.2 million members internationally out of the 2.0 million that had been forecasted. The company took in a record $2.15 billion in revenue, a jump of 36 percent over last year. It also added 3.6 million new subscribers, easily besting the 2.3 million it had projected.
Netflix’s over-performance against forecast (86.7m total streaming members vs. forecast of 85.5m) was driven primarily by stronger than expected acquisition due to excitement around Netflix original content. With captivating series like Stranger Things, Nacros and Marvel’s Luke cage, which will continue with Iron Fist on March 17, 2017, Netflix expects revenues to sore high. They are looking forward next year to The Defenders, a team-up of the characters from their first four Marvel series. Netflix is investing in more content across multiple international markets in Q4 and, as a result, they project international contribution loss to grow moderately to $75 million.
Subscriber growth
The company had projected membership would grow by 2.5 million new subscribers, but second quarter earnings revealed slightly under 1.7 million new members signed up. “We are growing, but not as fast as we would like or have been,” the company said in its Q2 letter to investors.
In a letter to investors, the company admitted it had failed to reach its projected subscriber growth due to older members leaving the service, or “churn.” So the best solution was to unlock the service to the rest of the world, and this led to Netflix aggressively pushing into new territories. The company announced expansion into 130 new countries including Uganda, markets with hundreds of millions of customers that, until recently, had no way to sign up for Netflix. That may help it to bolster subscriber growth, but it won’t boost the bottom line. Executives have warned international markets are not likely to become profitable for several years since the content is limited in comparison to the US bases Netflix content.
Netflix is now available in 22 languages, less than half of what YouTube offers. The service has focused on creating original shows instead, and said today it plans to create 1,000 hours of original content in 2017, nearly doubling the 600 hours of new programming it made this year.
