Netflix Gains More Subscribers in Q1

Netflix gained 7.4 million subscribers during the first three months of 2018, according to the report the company submitted. It currently has 125 million subscribers, 50 percent higher than the same three months last year.

The huge subscriber growth was announced prior to Wall Street’s predictions release. This helped push Netflix’s stock 6 percent higher during the after-hours trading.

Daniel Ives, who is an analyst with GBH Insights, said that the Netflix earnings were truly “eye popping.”

“It shows the company’s aggressive international expansion strategy is bearing fruit and putting major fuel in the company’s growth engine for the rest of 2018 and beyond,” wrote Ives in an investor note.

Days before Netflix’s report, expectations have already been high. Even if numerous leaders in the tech business industry have fallen steeply due to regulatory concerns, Netflix stocks have rocketed 60 percent over upbeat outlook on its original content strategy.

During a conference call with a number of analysts, Netflix officials admitted that even they were surprised by the company’s level of success.

“We’ve outperformed the business in a way we didn’t expect. The business has grown faster than we expected,” said David Wells, who is Netflix chief financial officer.

A huge portion of that growth comes from overseas market. The huge majority of new subscribers that amounted to almost 5.5 million last quarter came from countries other than the United States, with Netflix continuously gaining ground and steadying a firm footing in international markets.

In the first three months of this year, Netflix started 18 original series, as well as 11 new seasons for existing original series. It has also launched 14 original movies. These figures came from Michael Pachter, an analyst from Wedbush.

Among the new programs shown on Netflix is a new season of “Jessica Jones.” In addition, they also launched a reboot of “Queer Eye” and a new talk show by David Letterman. The new talk show started the ball rolling with an interview with former United States president Barack Obama.

In 2018, Netflix expects to launch 700 programs available for its customers. However, it specifically does not plan to expand into the news programs area.

“We’re not looking to expand into news beyond the work that we’re doing in shortform and longform feature documentary,” said Netflix’s chief content officer Ted Sarandos on the conference call.

On the flip side, the contents they create are quite costly. The business predicts that it will spend as high as $8 billion on shows and various movies this year.  This figure is higher than the $6 billion spent last year, according to its earnings report.

Netflix is prepared to spend $17.9 billion to its steaming content deals. This is higher than the $15.3 billion a year earlier. According to some reports, it also dished out $300 million to let make Ryan Murphy, who is the producer of “Glee,” join the company.

In order to offset the growing amounts of costs, Netflix increased its prices 10 percent in the last quarter of 2017. The standard service now costs $10.99 per month. In spite of that, the company still saw its subscriber growth balloon in the right direction.

In the incoming quarter, the company is preparing to gain 6.2 million subscribers. That figure also exceeds Wall Street estimates.

Netflix still faces tight competition. Apple is reportedly increasing its investments in original content. Amazon, meanwhile, is rumored to be preparing to dish out $1 billion on one TV show. Facebook is also pushing deeper into the creation of video contents.

Many analysts agree that Netflix has already made a huge enough head way to start losing ground.

“Netflix has changed the industry in a profound way and in doing so has given itself a significant lead, making it very difficult for the traditional media companies, or even other big tech companies, to catch up,” Deutsche Bank’s Kraft wrote during the previous week.

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