Netflix has released Q4 figures which it suggests are “beautiful” completing a “great” year as Internet TV expands globally. In 2017, the company grew streaming revenue 36 per cent to over $11 billion, added 24 million new memberships (compared to 19 million in 2016), achieved for the first time a full-year positive international contribution profit, and more than doubled global operating income.
In Q4, Netflix registered global net adds of 8.3 million, the highest quarter in its history and up 18 per cent vs. last year’s record 7.05 million net adds. This exceeded its 6.3m forecast primarily as a result of stronger than expected acquisition fuelled by its original content slate and the ongoing global adoption of Internet entertainment.
Geographically, the outperformance vs. guidance was broad-based. In the US, memberships rose by 2.0 million (vs. forecast of 1.25m) bringing total FY17 net adds to 5.3 million. Internationally, Netflix added 6.36 million memberships (compared with guidance of 5.05m), a new record for quarterly net adds for this segment. With contribution profit of $227 million (€185m) in 2017 (4.5 per cent contribution margin), the international segment delivered its first full year of positive contribution profit in Netflix’s history.
In announcing its Q4 numbers, Netflix also reported that it had added Rodolphe Belmer to its board of directors, bringing the total number of directors to ten and expanding the breadth of its global and entertainment experience. Belmer is the former CEO of Canal+ Group in France, and is currently CEO of satellite operator Eutelsat. “A large and growing percentage of our members are European, and we are fortunate to have a leader like Rodolphe join our board,” said the company. “We look forward to benefiting from Rodolphe’s wisdom, experience and global perspective as we continue to grow Netflix all over the world,” said Reed Hastings, Netflix co-founder and chief executive.
Paolo Pescatore, VP, Multiplay and Media, at analyst firm CCS Insight, said the results were “another phenomenal quarter of subscriber growth” for the company. “This tends to be a strong quarter for Netflix due to the holiday season, and the company did not fail to disappoint,” he added.
“With another stellar quarter this puts more pressure on its rivals who have struggled over recent quarters. All eyes now on the next quarter which generally leads to slower subscriber growth.”
“Telco partnerships will remain important for further subscriber growth over the next twelve months. We believe Netflix must continue focusing on adding more subscribers. Such growth increases revenue and profitability. Despite its reluctance, the company needs to diversify its business model by offering other services.”
“As many local providers and operators strengthen their video services, the competitive environment continues to intensify. Netflix will face stiffer competition as rivals launch live TV services and move into sports rights, as shown by recent efforts from Amazon and Facebook, in the US and Europe. And let’s not forget the rapid emergence of new players including Disney and other content and media owners which previously have been a key partner. All are making significant moves and taking huge bets in video.”
“To date, Netflix has set the benchmark and gained a far better understanding of consumer’s behaviour and attitudes to video content, but it should not rest on its laurels. This will force the company to continue to innovate and rely more than ever on its extensive relationships with cable and telecom operators.”
“These latest results clearly point to a clear consumer appetite to watch TV services over the Internet. With that in mind, Netflix must start shifting focus toward securing rights on a pan-region basis rather than country-by-country.”