Over the last three months, Netflix has added millions of subscribers, and earned billions of dollars in revenue. This strongly suggests that its decision to raise prices for existing subscribers hasn’t harmed the company in the slightest.
Netflix has revealed its financials for Q3 2016. They show that Netflix gained 3.6 million new subscribers and took in $2.2 billion in revenues during that time period. Unsurprisingly, given how positive these results were, Netflix’s stock has shot up by 20 percent in after-hours trading.
In terms of subscriber numbers, those 3.6 million mostly came from new markets. In January 2016, Netflix expanded into 130 new countries. And it’s adding millions of subscribers in these new territories. However, of the 3.6 million new subscribers, just 370,000 were in the US.
This shows that the price rise which hit grandfathered accounts earlier this year made very little difference to the overall number of people subscribing to Netflix. However, it also suggests Netflix has peaked in its country of origin, with US growth tapering off to nothing.
In terms of revenues, the $2.2 billion Netflix made in the last quarter is a record best for the company. And that shows the true power of price rises. Even if subscriber numbers stay level, Netflix will be making more money. At least all the while existing subscribers are happy to pay more for Netflix.
What Does the Future Hold for Netflix?
So Netflix had a good quarter, and the rising share price is testament to that. However, as is usual with financial reports, Netflix also focused one eye on the future. On that front, there are two things worth noting.
The first is Netflix’s plan to produce more original content. We recently discovered Netflix has removed half its catalog to fund more original content. We now know that Netflix plans to almost double the amount of original content it produces, from 600 hours this year to 1,000 hours next year. So if the likes of Stranger Things, Narcos, and Luke Cage hold no interest for you, you’re out of luck.
The second is Netflix’s continuing mission to launch in China. Netflix stated that as “the regulatory environment for foreign digital content services in China has become challenging [the company now plans to] license content to existing online service providers in China rather than operate our own service in China in the near term.” So, sorry, anyone reading this in China, but Netflix isn’t launching in your country anytime soon.
What do you think of Netflix as it exists today? Do you think the company is heading in the right direction? Or is the outward expansion and/or investment in original content damaging the brand? Please let us know in the comments below!
Image Credit: Jenny Cestnik via Flickr