Netflix gained almost 5 million new members in the first three months of 2015, as original content on the service continues to thrive.
Netflix added 2.3 million members in the US in the first quarter of the year, taking its total to more than 40 million. Internationally, 2.6 new members signed up to the service, taking its total worldwide membership to over 60 million. Both figures outperformed forecasts for the quarter.
Writing in a letter to shareholders, CEO Reed Hastings attributed the growth to the strong performance of its original content, from House of Cards Season 3 to Unbreakable Kimmy Schmidt and Bloodline.
Members streamed 10 billion hours of original content in the first three months of 2015, confirmed Netflix, a rare instance of the company revealing any indication of viewing figures. That works out as an average of 160 hours per member over the quarter: almost a week’s worth of TV over three months, or 53 hours (just over 2 days) per month.
“Our original series, documentaries and comedy specials are being enthusiastically received, and member engagement is at an all-time high,” said Hastings.
House of Cards’ third season enjoyed the show’s “biggest launch yet in terms of viewers”, while Bloodline – starring Kyle Chandler, Ben Mendelsohn and Sissy Spacek – is performing “on par with the first seasons of our other big drama shows”. With Unbreakable Kimmy Schmidt also a “hit”, it is no surprise that Netflix has already renewed all three for new seasons next year.
Netflix’s focus is increasingly turning towards its original slate: a steady pipeline of new releases will see titles arrive every quarter throughout the year. The coming three months will welcome Jane Fonda and Lily Tomlin drama Grace and Frankie and the Wachowski’s Sense8, not to mention the third run of Orange Is the New Black.
The streaming service is now spending more money marketing its original titles rather than any other aspect of the service – “early tests in international markets suggest this content focus is aiding member acquisition”, says Hastings.
“We are also developing improved ways to promote Netflix originals to our members, using our data to help identify which members would be most likely to enjoy each original title.”
The international growth was also fuelled by expansion into new territories, including Australia and New Zealand,w which added around 8 million households to the company’s target market. Netflix benefited from “high consumer awareness” in the region – indeed, there have been many reports in the media that customers were already signed up to the service before its launch, using a proxy to watch shows such as House of Cards.
The company insists that HBO is not a rival worth worrying about, arguing that both are not substitutes for one another due to “differing content”.
“We think both will continue to be successful in the marketplace, as illustrated by the fact that HBO has continued to grow globally and domestically as we have rapidly grown over the past 5 years.”
Other online cord-cutter offerings, such as the “rumoured Apple offering”, Dish’s Sling TV and Sony’s Playstation Vue, are also deemed as more competition for the pay TV industry than Netflix.
The letter places an emphasis on outperforming its membership growth target in an attempt to reassure shareholders in the wake of lower revenue: the strong US dollar, as with several companies, has hurt financial results, with international revenue lower by $48 million compared to the same period last year.
Nonetheless, the outlook is positive for the company: Netflix expects growth to keep on going, with international Q2 net additions of 1.90 million, up 70 per cent compared to last year. Later in 2015, Netflix will launch in more territories, starting with Japan.