Netflix nears 100m users but misses Q1 sign-up target
In a letter to shareholders to accompany its first quarter 2017 results, Netflix dismissed quarterly variances in customer sign-ups as “mostly noise” in the long-term growth and uptake of internet TV.
The subscription video on-demand giant added 4.95 million total streaming customers in the quarter, down from 6.74 million in the same quarter a year earlier and below its forecast of 5.20 million for Q1.
Netflix said that its decision to push the launch of House of Cards season five from Q1 to Q2 had a knock-on effect on sign-ups, and that international additions dropped 22% year-on-year as its January 2016 launch in 130 countries caused a “surge in demand”.
Netflix said it expects to add 3.2 million new customers in Q2 and to have a total of 8.15 million net adds in the first half of the year – down from 8.42 million in H1 2016.
“We remain incredibly excited about the opportunity in front of us to build a truly global and durable internet TV business. We expect to cross the 100 million member mark this weekend. It’s a good start,” said Netflix summing up its quarterly letter to shareholders.
The company described the opportunity provided by the growth of the global internet is “gigantic” and said it plans to keep investing as it increases membership, revenue and operating margins.
Netflix revealled it will spend more than US$1 billion in marketing its content this year as its slate of originals continues to expand, and will up its investment in programmatic advertising.
It also said it will expand its language support beyond the 24 languages it currently supports, adding Thai this month and Romanian and Hebrew later this quarter.
Discussing competition, Netflix predicted the launch of new over-the-top subscription TV services in the US – like YouTube TV and Hulu’s forthcoming TV offering – will not have “much of an impact” on the business as Netflix is “largely complementary” to pay TV packages.
“Additionally, investors ask us about Amazon’s move into NFL football. That is not a strategy that we think is smart for us since we believe we can earn more viewing and satisfaction from spending that money on movies and TV shows,” the company said.
Overall Netflix’s net income for the quarter grew more than sixfold year-on-year to US$178.2 million, while revenues climbed to US$2.64 billion compared to US$1.96 billion a year earlier.