Netflix may not be at Cannes this year, but it’s enjoying a record start to the year, with its total membership soaring to 125 million worldwide.
The streaming giant added 7.41 million customers in the first three months of 2018, a record for any Q1 and up 50 per cent year-on-year. Revenue rose to $3.7 billion in Q1, up 43 per cent year-on-year – the fastest pace in the history of the streaming business. That’s due to a 25 per cent increase in average paid streaming memberships and a 14 per cent rise in the average subscription fee.
That revenue, of course, will be invested in more original content, with a budget of $7.5 billion to $8 billion for 2018, as previously estimated. It will continue to raise debt to fund the rapid increase in content spend, and has also upped its marketing spend by 77 per cent in the last three months (to $479 million) to help convert that content production into subscribers and income. The strategy continues to pay off so far, with its 7.41 million subscribers up from he 6.35 million it forecast. Growth outside of America is a particular sign of Netflix’s strengthening position – its international segment now accounts for 55 per cent of its memberships and 50 per cent of its revenue.
Successful titles in Q1 2018 for Netflix included the dark, coming of age story The End of the F***ing World, co-produced with Channel 4, sci-fi thriller Altered Carbon, and returning seasons of Marvel’s Jessica Jones, Grace and Frankie, Santa Clarita Diet and A Series of Unfortunate Events. Its investment in international content is also key, with La Casa de Papel (Money Heist), a Spanish language heist thriller, becoming the most watched non-English series on Netflix ever.
Netflix’s speedy expansion has also been helped by its major push into unscripted programming, from reality TV to talk shows – a push that has made Netflix more and more like traditional American broadcasters, rounding out its appeal to a wider range of demographics.
“Our output in this area is now comparable to similarly-focused US domestic cable networks,” commented CEO Reed Hastings in a letter to subscribers. “Shows like Queer Eye and Nailed It are great examples of our ambitions in this area: engaging, buzz-worthy shows that drive lots of enjoyment around the world.”
Netflix’s dispute with Cannes has sparked some criticism of the streaming giant for not supporting its original content enough, particularly in the case of original films. Netflix cites The Cloverfield Paradox’s surprise launch on Super Bowl Sunday, though, as proof of a successful promotional push.
“Through tight coordination among our original film, product, marketing and PR teams, the event showcased how a big branded film can be marketed and delivered to consumers instantaneously across the globe without a wait for the theatrical window,” said Hastings.
He also noted that Alex Garland’s Annihilation, which Netflix premiered outside of North America, has enjoyed “large audiences in nearly every country”.
Hastings also addressed the Cannes issue directly, adding: “We regret our films not being able to compete at this year’s Cannes film festival. The festival adopted a new rule that means if a film is in competition at Cannes, it can not 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.”