Netflix now has over 100m members, forecasts international profits

Membership for the platform grew more than expected

David Giesbrecht / Netflix

Netflix has reported its latest earnings, noting it has passed a membership milestone and has big news about its international audience.

In a note to shareholders, Netflix reported streaming membership grew more than expected, from 99m to 104m, due to what it labelled “our amazing content”.

The company continued: “We also crossed the symbolic milestones of 100m members and more international than domestic members. It was a good quarter.”

Audience growth

Netflix noted it underestimated the popularity of the slate of content which led to higher-than-expected acquisition across all major territories. As a result, global net adds totalled a Q2-record 5.2 million (vs forecast of 3.2m).

For the first six months of 2017, subscriber growth was up 21% year-on-year to 10.2m.

The Crown

Netflix assumes it will maintain current momentum, but it was wary of being too bullish.

The international subscribers now account for more than half of the membership base – 50.1%.

International revenue rose 57% year-over-year.

International losses were down to -$13 million vs -$69 million (all amounts US dollars) due primarily to higher-than-forecasted paid members.

Growth in Australia is contributing to a Netflix Q3 2017 international forecast of 3.65m new customers.

Regarding international earnings, Netflix commented: “We are making good progress with our international expansion as improving profitability in our earlier international markets helps fund significant investment in our newer territories. As a result, we expect positive international contribution profit for the full year 2017. This would mark the first ever annual contribution profit from our international segment.”

Stranger Things

Content

Netflix highlighted that the Television Academy has nominated 27 Netflix original programs with 91 Emmy nominations, nearly double last year’s tally. With five of the 14 total nominated best series contenders (Stranger Things, The Crown, House of Cards, Master of None and Unbreakable Kimmy Schmidt ), Netflix had the most nominated series of any network.

Both Stranger Things and The Crown will have second season premieres in 2017.

The staggering content pipeline running out of Netflix has seen Q2 premieres of 14 new seasons of global Netflix original series, 13 original comedy specials, six original documentaries, two original documentary series, nine original feature films and seven seasons of original series for kids.

Netflix also shed some light on its programming decisions: “Sometimes those shows don’t attract as many viewers as we had hoped, compared to our other content. As much as we dislike ending a series early, it consoles us that it frees up investment for another new show, or two. We are programming to please our members and we keep that as our guiding light. We love it when we support a new series that has big impact like Stranger Things, Cable Girls and 13 Reasons Why.

13 Reasons Why

Growing video entertainment

Netflix has also commented on the changing way people are consuming video content:

“In addition to the many SVOD players around the world (Blim, Globoplay, FilmStruck, Hooq, iflix, Stan etc) the large-cap tech companies, especially Amazon, are investing heavily in original and licensed content around the world. They join all the existing TV networks (BBC, AMC, NHK etc) of the world, and us, in bidding for great content. 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. The internet may not have been great for the music business due to piracy, but, wow, it is incredible for growing the video entertainment business around the world.”

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