Netflix Beats Subscriber Estimates in Q3

Christian Cutler October 17, 2017
Netflix Beats Subscriber Estimates in Q3

Netflix Inc gained more subscribers than expected in the third quarter, pushing its shares to record high, saying that it had a head start on rivals as internet television becomes increasingly used globally.

Netflix’ subscribers count rose by 5.3 million to 109.3 million in the third quarter, settling to roughly 1 million more than what Netflix and Wall Street’s analysts forecasted. This means 29 percent increase in the net additional users so far in the current year.

On Monday, its shares smashed a record high and climbed up further to 1.2 percent after hours to $205.07, which essentially means that they are up to roughly 64 percent for the whole year.

The world’s largest online video streaming service forecasts 6.3 million subscribers to join its count in the current quarter. The figure is just above what analysts suggest, estimating around 6.25 million additional customers, which would bring the company’s global base to almost 115.6 million.

According to reports, the company is going for “slow and steady” price increases, which it plans to justify by increasing the original contents that can be found in its service.

“Price is all relative to value,” said Reed Hastings, Netflix chief executive officer.”We are continuing to increase the content offering and we are seeing that reflected in viewing around the world. We try to maintain that feeling that consumers have that we are great value in the amount of content that we have, relative to price.”

The company has been making their original shows, like House of Cards, and has been heavily betting on the production and acquisition of more contents, as it tries to lead the television streaming industry in the international market. The international market presently accounts for the majority of its subscriber growth.

According to its letter to shareholders, Netflix plans to give its content budget a boost, dishing out between $7 billion and $8 billion next year. It also said it would release an average of 80 original movies in 2018.

“As we move into 2018, we aim to achieve steady improvement in international profitability and a growing operating margin as our success in many large markets help fund investments throughout Asia and the rest of the world,” Netflix wrote in the letter.

Among the up and coming contents that it will offer to viewers are Bright, which will star Will Smith, and Suburra and Dark, its first series in Italian and German respectively. Other original contents that would received budget boosts are The Crown and Stranger Things.

Hastings preemptively informed reporters that his company has no intentions of acquiring The Weinstein Company, which is presently seeing its future unclear with allegations of serial sexual harassment aimed at its co-founder Harvey Weinstein, also implicating Amazon Studios in the process .

“It would be extremely unlikely for us to be a bidder for the firm,” said Hastings.

The US-based streaming service’s revenues also rose 30 percent on a year-to-year basis to $2.99 billion, leaving behind analysts’ forecasts. Its net income rocketed 150 percent to $130 million.

Although investors are often bullish about the company’s customer capabilities, Netflix is still facing an increasingly escalating competition with rivals, such as Amazon.com’s Prime Video. Meanwhile, Walt Disney Co opted to pull out its first-run movies in Netflix in the US by 2019, and is currently planning to launch its own online offering.

“We have a good head start but our job is to improve Netflix as rapidly as possible,” said Netflix, adding that Disney’s decision highlights the need to establish its exclusive original content further.

Recently, Netflix has struck a deal with the Canadian government in an attempt to create programs in the said country. This marks the first time the company establishes a permanent production presence outside the United States.

“While we have multilayer deals in place preventing any sudden reduction in content licensing, the long-term trends are clear. Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes,” said Netflix.


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Christian Cutler

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