Netflix has added 7 million subscribers in the last three months, in what has been a record period for the company.
The streaming giant suffered a slight blow earlier this year, when it added fewer than expected subscribers, prompting speculation about its ability to continue growing. The third quarter of 2018, though, saw Netflix blast away those concerns, with 6.96 million total net additions, up 31 per cent on the 5.3 million added in the same period last year and higher than the 5 million predicted.
Netflix attributes the growth to its “broad slate” of original programming, with streaming revenue rising 36 per cent year-on-year and its total global membership growing to 137 million.
The success arrives as Netflix shifts its content game significantly, moving increasingly away from licensed content, both non-first-window (Shameless) and first-window (Orange Is the New Black) to its own first-window content produced in-house at Netflix’s studio (Stranger Things). That push has been going for two years, giving Netflix better control over the rights for its content, strengthening its brand and lowering its costs. It’s also just acquired a new site in Albuquerque, New Mexico, where it will form a new US production hub and anticipates bringing $1 billion dollars in production over the next 10 years and creating up to 1,000 production jobs per year.
Notable Netflix original titles produced in-house including Godless, Bright, Dark, Sacred Games and The Kissing Booth. The latter is particularly key, as Netflix has doubled down on romantic comedy this summer, with rom-coms such as Set It Up and Like Father enjoying success. To All the Boys I’ve Loved Before, in particular, has been a huge hit.
Part of that success can be seen in the way that it has helped form a new generation of stars, such as Millie Bobby Brown, Jacob Elordi, Noah Centineo and Gaten Matarazzo. Netflix’s younger talent have grown from small followings on Instagram to as many as 10 million followers, for example.
This December, Netflix will also be positioning itself as an Oscar contender with the launch of Roma, from Gravity director Alfonso Cuarón. It will debut on Netflix and on over 100 cinema screens worldwide, just as Netflix is doing currently with 22 July, from Paul Greengrass.
“We believe in our member-centric simultaneous release model for our original films and welcome additional theatre chains that are open to carrying our films to provide the shared-viewing, big-screen experience to their customers who enjoy that option,” said CEO Reed Hastings in a letter to shareholders.
While all of this is helping Netflix compete with other streaming services or forms of online entertainment, the streaming giant’s other big obstacle include the upcoming European Union rule change, which will introduce quotas for SVOD platforms to devote a minimum of 30% of their catalog to European works. Some member states are also looking to require such services to invest some portion of local revenues into European works. Netflix has already been stepping up its investment in European productions in recent years, in anticipation of the rule change.
“We anticipate being able to meet these requirements by evolving our content offering,” noted Hastings. “We are heavily investing around the world to share stories broadly and to strengthen local production capacity and opportunity. We’d prefer to focus on making our service great for our members, which would include producing local content, rather than on satisfying quotas, but we anticipate that a regional content quota which approximates the region’s share of our global membership will only marginally reduce member satisfaction.”
“We believe a more effective way for a country to support strong local content is to directly incentivise local content creators, independent of distribution channel,” said Hastings, in response to the law.
Netflix now predicts growth of 7.6 million paying subscribers in the final three months of the year.