Netflix doesn\u2019t hide its formula for success. It invests billions in original programming and uses those new TV shows and movies to lure subscribers. The Los Gatos, California-based streaming company released a record 676 hours of original programming in the third quarter, according to Cowen & Co. That marked the first time it has exceeded 500 hours in any quarter.<\/p>\n
The slate included new seasons of the drama \u201cOzark\u2019\u2019 and the animated comedy \u201cBoJack Horseman,\u2019\u2019 as well as new series \u201cInsatiable\u2019\u2019 and \u201cManiac.\u2019\u2019<\/p>\n
Netflix never identifies which shows are most successful. Nor does the company release viewership figures for programs, contending that its subscriber growth demonstrates the popularity of its entertainment slate.<\/p>\n
Yet the company did acknowledge one point of strength: India, where it just released its first original series, \u201cSacred Games\u201d and \u201cGhoul.\u201d Those shows made Netflix \u201cfeel more local, more relevant\u201d to local consumers, Chief Content Officer Ted Sarandos said during the call.<\/p>\n
India is already one of the biggest markets for YouTube, a chief competitor, and holds great potential for Netflix. It is the world\u2019s second-most-populous country, and hundreds of millions of residents now have access to the internet.
\nOverseas Expansion<\/p>\n
International territories remain the key to the company\u2019s future, and accounted for 84% of Netflix\u2019s new customers in the third quarter. Netflix doesn\u2019t break out its users by market, with the exception of the U.S., though most analysts agree that the U.K., Brazil, Canada and Mexico rank among the company\u2019s largest.<\/p>\n
In the US, where Netflix can already claim almost half of households as users, the company expects to add 1.8 million new customers this quarter, bringing the domestic total to 60.3 million.<\/p>\n
The additions helped lift profit more than threefold to 89 cents a share, beating the 68-cent average of analysts\u2019 estimates. Sales grew 34% to $4 billion, meeting Wall Street forecasts. In all, Netflix added almost 2 million more subscribers than the 5.09 million Wall Street expected.<\/p>\n
The company expects to sign up 9.4 million new subscribers this quarter, far above the 7.18 million average of forecasts compiled by Bloomberg.<\/p>\n
Netflix shares typically fluctuate widely after earnings, and this quarter was no exception. The stock soared in after-hours trading to $405, putting the market value of the company in the same territory as Comcast Corp, the largest US cable provider, and Walt Disney Co., the world\u2019s largest entertainment company.<\/p>\n
\u201cIt was a surprisingly good quarter that caught a lot of the financial community off guard,\u201d said Jim Nail, a senior analyst at Forrester Research Inc. \u201cEven the US number was better than I thought it would be. That\u2019s a really good number for a market that\u2019s this mature.\u201d<\/p>\n
Rivals have long groused that Netflix can spend ungodly sums without ever having to make money itself. While the company reports a net profit, it spends more than it takes in and borrows frequently to finance its programming budget.<\/p>\n
Netflix has spent nearly $7 billion on programming through the first nine months of the year, and plans to boost its investment in the years to come. While most of that still funds shows licensed from other companies, original programs account for a growing share.<\/p>\n
The company is close to purchasing a production facility in Albuquerque, New Mexico, and recently leased a second office tower in Hollywood.<\/p>\n
\u2018Game Is On\u2019<\/strong><\/p>\n Netflix has upended the economics of pay TV by offering customers thousands of programs on-demand for a monthly fee that\u2019s a fraction of the cost of a multichannel cable or satellite package. The number of people paying for cable or satellite has fallen in recent years, denting profit at the world\u2019s largest media companies and triggering a wave of mergers.<\/p>\n Media companies that once sold programs to Netflix for hundreds of millions of dollars are now building their own on-demand services to compete head on. Disney and AT&T Inc, the parent of Warner Bros. and HBO, are each looking to introduce new services next year – after completing takeovers of other companies worth a combined $160 billion.<\/p>\n Hastings, 58, suggested that he wasn\u2019t worried about the competition.<\/p>\n That\u2019s going to make it exciting for us, great for consumers and incredible for producers,” he said. “The game is on.”<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/10\/Netflix.png\")
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