- Netflix posted earnings that blew past Wall Street expectations, sending its stock skyrocketing.
- The company is continuing to invest heavily in new content, which in turn helps to keep driving subscriptions.
The streaming giant added a total of 8.34 million subscribers in the fourth quarter of 2017 — 2 million more than Wall Street was expecting, including a surprise increase in domestic consumers 34% higher than predicted.
“It was five years ago when we said we thought the market in the U.S. would be somewhere between 60 million and 90 million,” CEO Reed Hastings said on the company’s earnings call Monday. “We’re still only at 55 million.”
Morgan Stanley analyst Ben Swinburne estimated this month that Netflix’s current subscriber base is roughly equal to half of all US homes — a proportion that will only continue to grow.
Hastings attributes the enduring subscriber growth to word-of-mouth sharing as more customers rave about Netflix’s blockbuster originals. Of course, a marketing budget akin to that of a major Hollywood movie studio probably doesn’t hurt either.
“’Grace and Frankie’ launched its new season this week, which clearly reaches an older demographic, but it keeps getting broader and bigger every year, meaning that it’s even though it was intended for a specific older demographic, young people love it as well,” he said on the call. “They’re discovering it through word-of-mouth from a lot of new sources. So, I think back when we talked about that market size back then, that’s a very fluid market in terms of what demographics of people are watching content on the Internet.”
Netflix is sticking to its planned $8 billion investment in original content, coupled with a high-profile price hike, both of which are being Read More Here