Strong 2016 sees Netflix near 100 million subscribers
James R | On 19, Jan 2017
A strong 2016 has left Netflix eyeing up 100 million subscribers at the start of the new year.
In the fourth quarter of 2016, the subscription giant added 7.05 million new subscribers globally, outperforming its own expectations of 5.2 million and outstripping the 5.59 million added in the same period of 2015. Indeed, this is the largest quarter, in terms of net additions, in the company’s history, driven by 1.93 million US subscribers and 5.13 new international subscribers. Across the whole year, Netflix added 19 million subscribers (up on 2015’s 17.4 million), taking its total membership base to 93.8 million.
The result consolidates Netflix’s position on the world stage: around 47 per cent of its members are now outside of the US, with CEO Reed Hastings telling shareholders that growth was “broad based geographically”.
The company now expects to hit the 100 million mark in the first quarter of 2017, although it is cautious in its outlook for the start of the year, as the comparison point for 2016 was the period when it first launched worldwide, leading to higher than expected growth. At the same time, Netflix also anticipates a greater membership impact from its content slate in the second half of 2017. Even House of Cards Season 5 has been pushed back to Q2 2017.
The impact of content upon its membership is something that Netflix is “learning rapidly”, from when to release titles to where to produce them.
“It is clear to us that high quality content travels well across borders. For instance, our global originals like Marvel’s Luke Cage, The Crown and season 3 of Black Mirror continue to generate excitement and excellent viewing all across the world. Similarly, Gilmore Girls: A Year in the Life debuted in the top 10 in every territory,” says Hastings.
Guillermo Del Toro’s Trollhunters, which launched in December, is on course to be Netflix’s most-watched kids’ original, but is performing “particularly well in our newer territories”, adds Hastings.
Even Netflix’s first Brazilian original series, 3%, has been not just one of the most watched originals in Brazil but has seen “millions of US members” watching the show dubbed or subtitled into English, which makes 3% “the first Portuguese language television show to travel meaningfully beyond Latin America and Portugal”.
Netflix is now aiming to repeat that pattern by focusing on “local content that travels pan-regionally or across multiple territories”, such as Japanese anime and Turkish dramas. It has also signed a deal with Shah Rukh Khan to become the global home of his new films, which will give them sway among Bollywood fans worldwide.
Netflix has been criticised by subscribers in the last year for cutting some deals (particularly in the US) that saw it lose a hefty chunk of its third party library. But Netflix’s decision to gamble on original content, and exclusive co-productions, which enable it to distribute things around the world, has paid off.
“There remains a lot to learn to make Netflix as popular abroad as it is in the US,” admits Hastings.
But it has the financial clout to double down on that ambition: in 2016, Netflix spent $5 billion on content. In 2017, that will increase to over $6 billion. Others are now taking a leaf from its book, with the BBC planning to debut more shows on iPlayer as box sets before linear broadcast, Amazon Prime Video going global last month (after Netflix followed Amazon’s lead to introduce offline downloads) and CBS’ Star Trek reboot launching as an SVOD exclusive this year. But with five of the top 10 most-searched TV shows of 2016 made up of Netflix originals, according to Google Trends, and with the streaming giant’s first Golden Globe for Best Series going to The Crown this month, its reign over online video looks set to continue.