Netflix Delivers Strong Revenue, Subscriber Gains

Netflix has topped the 125 million subscriber mark globally and saw its revenues rise to $3.7 billion in Q1 2018.

Net profit for the period rose to $290 million from Q1 2017’s $178 million. Its first-quarter revenues were up 43 percent year on year, “the fastest pace in the history of our streaming business,” the company said in its letter to shareholders. For Q2 the platform is projecting revenues of $3.9 billion and a net profit of $358 million.

U.S. streaming revenues totaled $1.8 billion from 56.7 million total memberships, reflecting a net addition of 1.96 million. International streaming revenues rose to $1.8 billion from 68.3 million total memberships, with 5.46 million net additions. Its global net additions figure of 7.4 million was a new first quarter record, 50 percent higher than Q1 2017 and well ahead of its 6.35 million forecast.

In 2018, Netflix says it will spend between $7.5 billion and $8 billion on content across multiple genres. Following its expansion into unscripted, “our output in this area is now comparable to similarly-focused U.S. domestic cable networks,” the shareholder letter noted. It also referenced the growing popularity of non-English-language content on the service. In Q1, the Spanish series La Casa de Papel (Money Heist) became the most watched non-English series on Netflix ever.

On the move by the Cannes Film Festival to exclude Netflix original films from the competition, the letter stated: “The festival adopted a new rule that means if a film is in competition at Cannes, it cannot be watched on Netflix in France for the following three years. We would never want to do that to our French members. We will continue to celebrate our films and filmmakers at other festivals around the world but unfortunately, we will have to sit out Cannes for now so that our growing French membership can continue to enjoy our original films.”

On its alignments with Ryan Murphy, Shonda Rhimes, Jenji Kohan and others, Netflix said, “While these overall deals are a substantial investment for us, they allow us to work directly with prolific and talented creators with a proven track record of success. Instead of having to license their shows for a finite period from outside suppliers, we will own the projects we produce with them. This approach also allows us to reduce our reliance on third-party studios and forego the corresponding license premiums we’ve historically paid.”

On its partnerships with pay-TV providers and mobile operators, Netflix noted, “These relationships allow our partners to attract more customers and to upsell existing subscribers to higher ARPU packages, while we benefit from more reach, awareness and often, less friction in the signup and payment process. We believe that the lower churn in these bundles offsets the lower Netflix ASP. We remain primarily a direct-to-consumer business, but we see our bundling initiative as an attractive supplemental channel.”