Netflix capped ’17 with surge of new subscribers
Streaming king adds 8M customers in fourth quarter
Go ahead and put a crown on Netflix’s head, because there is nothing strange about what the internet TV leader had to say with its fourth-quarter report on Monday.
In a sign that not even a price increase can slow down Netflix’s momentum, the company said Monday that successful new seasons of hit shows such as the young Queen Elizabeth II drama “The Crown” and the 1980s-themed suspense series “Stranger Things” helped Netflix add 8.33 million new subscribers during the final three months of 2017. Netflix said it was biggest single quarterly gain in subscribers in the company’s history, and blew past its own forecasts for 6.3 million new subscribers in the quarter.
The subscriber gains reflected Netflix’s ongoing strength in the U.S. and its international markets. The company added 1.98 million new subscribers in the U.S. after earlier forecasting a gain of 1.25 million such members, and international subscribers grew by 6.36 million, compared to its earlier estimate of 5.05 million new subscribers.
Speaking on a conference call about Netflix’s results, Chief Executive Reed Hastings addressed the matter of how Netflix is able to grow its U.S. subscriber base, in particular. Hastings mentioned that Netflix ended the quarter with almost 55 million memberships in the U.S., which is still below the 60 million to 90 million subscribers the company estimated it could reach five years ago.
“We continue to make it easier to access,” Hastings said. “And the real driver is to make the bigger titles bigger.”
With those subscriber additions, Netflix ended 2017 with 117.6 million subscribers worldwide.
“Overall, this was a home run quarter for Netflix,” said Daniel Ives, head of
technology research at GBH Insights. It “should put any lingering worries to rest around subscriber growth, international ramping of business and the negative possible effects from the price increase.”
During the quarter, Netflix implemented a price increase, which raised the subscriber fees of two of its plans by $1 or $2 a month,
to either $10.99 or $13.99 a month. Because of past instances in which Netflix raised its prices, there had been some concerns that its latest increase might have negatively affected Netflix’s subscriber numbers.
The results were strong enough that Netflix said it now expects to spend between $7.5 billion and $8 billion on new content this year, compared to an earlier estimate of $7 billion to $8 billion, and the $6 billion Netflix laid out for content acquisition and production
in 2017.
Netflix said the gains in subscribers also helped it report a fourth-quarter profit of 41 cents a share, on revenue of $3.29 billion. The earnings were line with Wall Street analysts’ forecasts, while Netflix’s revenue slightly exceeded analysts’ consensus outlook for $3.28 billion in sales.
For the first quarter of 2018, Netflix said it expects to add 6.35 million new subscribers, with 1.45 million coming from the U.S. and 4.9 million in overseas markets. The company also forecast earnings of 63 cents a share, on revenue of $3.69 billion, for the quarter ending in March.
Investors showed their enthusiasm for Netflix’s results by sending the company’s shares up by about 8.5 percent, to $246.90, in after-hours trading Monday.
Earlier, Netflix shares rose 3.2 percent, to $227.58, in Monday’s regular trading session.