Netflix had a somewhat fulfilling year by very Netflix-y grade: it gain a large number of subscribers; its global growth plans seem to work out as expected; it triumphed in the Golden Globe nominations, and users are watch a ton of Netflix.
While the firm has realized this notable growth with its working strategy — investing largely in its original content strategy hoping that as Emmy and Grammy awards are converted into subscribers — it will get costlier.
Netflix has actually accepted that as it says it will ramp up its original content and marketing cost, and said it would increase to $1.6 billion in debt in October.
In short, its strategy that worked out this year will, theoretically, play out next year as it intend to go on putting out strong original shows.
The company has stated it forecast to spend between 7-8 billion dollars on original content, a clear symbol of doubling down on that strategy that seems to have given it a pretty victorious strategy in 2017.
It had to increase prices, which could make a bigger problem to consumers. But if all goes fine, a successful repetition of that strategy — which implies it has to continue to bring forth great shows — will help to maintain the growth where it needs.
The firm’s performance wholly has made it appear pretty good for Wall Street. Netflix’s share price has gone up more than 50 percent in 2016.
That comes with it a whole batch of benefits: it seems great as a public measuring instrument for the company, it shows the company can ask out talent with good compensation plan, and it repels activist investors that are expecting to fight for change in the company. Please view the market share trend here
All the time this is happening, Netflix’s content costs are rapidly increasing.
And that’s a kind that, for better or worse, Netflix wants to keep moving on. Netflix might have to fight with an rising competitive firms, Hulu and Amazon inclusive, which are now tossing out shows that are receiving similar credits to Netflix’s best series. Hulu released The Handmaid’s Tale, which received high credit, showing that there is a chance to pursue Netflix’s sweet spot with its own genuine content.
If Netflix is need to have a repeat of 2017, it’ll have to figure out how to both retain picking up users (a strategy seeming to be working in place) and keep them from changing to other services.
Each service provides some unique original content, however they also have large backlogs of content that function as the pillar of a video streaming service. With increasing prices, Netflix has to make sure it makes good shows, but also ensure that it foster an experience that makes people keep coming back to watch — whether that is through upgrade in its endorsement engine or a powerful backlog of content that it can keep signing on.
Netflix passed a pretty notable milestone when it comes to its global expansion plans: (slightly) beyond half of its subscribers now come from outside the United States. Its users watch close to 1 billion hours of content every week (isn’t it interesting?). View Netflix subscriber trend here quarterly from 2015 till date taking into account subscriber locally and globally.
Its expense on original content shows to be working on that part, too, with globally-oriented shows like 3%. Its user base shows to be increasing, though it’s still probable when it will hit that perfect saturation point where it will have to start figuring out what the next generation of items looks like.