Media & Entertainment Industry Trends, Technology and Research

#12 M&E Research : Netflix set to become global Internet TV Network, crosses 50 million subscribers

Posted In OTT, Research - By Nitin Narang on Saturday, July 26th, 2014 With 1 Comment

Netflix, which gulps around a third of North America’s Internet traffic during peak hours, is innovating to break new frontiers. It’s mantra for no commercials, no long term contract and a straight set fees of eight dollars has found tremendous favor from consumers. The service enables consumers to watch uninterrupted flurry of films and shows at their convenient time on a device of choice, a unique combination which has made Netflix an unparalleled leader in SVOD industry.

NetflixNetflix Q2 numbers which came early this week beat analysts’ expectations with revenue of $1.34 billion and earnings per share of $1.15. Interestingly while video subscription numbers are declining for most satellite and cable service providers, Netflix stands tall with steady growth in its subscription numbers. Netflix, which began subscription business 15 years ago, saw its total subscriber base grow by 1.69 million in last quarter to bypass the magical 50 million mark. It’s domestic subscriber base grew by 570k to 36.2 million while international subscriber base grew by 1.12 million to 13.8 million, a growth of 78 percent year-over-year. It’s net income doubled more than twice to $71 million from $29 million a year earlier. Meanwhile on account of expansion costs, its international business still remains negative but the subscription number continue to grow.

Netflix’s strategic roadmap

  • After conquering parts of Europe (UK, Ireland, Denmark, Finland, Norway, Sweden, and the Netherlands), Netflix has its expansion plans set for Germany, France, Austria, Switzerland, Belgium, and Luxembourg for September 2014.
  • Netflix recently made agreement with Sacem  (Society of Authors, Composers and Publishers of Music) which guarantees local creators remuneration for featured content. The move remains critical for smooth launch in France which is a tough territory with stringent media regulations and extreme protectiveness for locally-created content.
  • Netflix is exploring introduction of gift cards, with roll out in the US, Mexico, Canada, and Germany later this year.
  • Plans to add apps to smart TVs running on Google’s Android platform from manufacturers including Sony and Sharp.
  • Plans to expand into producing feature films, a move in direct competition with Pay TV networks
  • Experiment to introduce late night style original talk shows.

Netflix philosophy to customize content offerings in sync with local cultures and regulations will help its global expansion plans. With growing consumer appetite for on demand video services, Netflix growth is expected to witness a strong northbound trend in days to come.

What is your perspective?

What is your perspective

What is your perspective

  1. As more 4k content transitions towards OTT rather than broadcast, could Netflix emerge as the premium quality network as it endorses 4K much faster than competition.
  2. Will Netflix rather buy content production studios to ensure steady growth and success of its home grown series
  3. Netflix competes and complements service providers but with growing success of its original programming both in audience and awards (31 Emmy nominations)-  Is there a major production house in making?

About - Digital Media Technology Consultant. I have passion for TV technology, digital convergence and changing face of Media and Entertainment industry.