Netflix beefs up int’l focus as subscriber growth falls short

If Netflix’s predictions are correct, the global video streaming giant will surpass the 100-million member mark  this weekend. The prediction comes as the service made public it’s Q1 2017 results, reporting an ...
April 18, 2017

If Netflix’s predictions are correct, the global video streaming giant will surpass the 100-million member mark  this weekend.

The prediction comes as the service made public it’s Q1 2017 results, reporting an added 1.42 million subscribers in the U.S., with an additional 3.53 million in the rest of the world.

Despite the growth, subscription numbers fell short of expectations — the company previously predicted 1.5 million in the U.S. and 3.7 million internationally. The forecast shortfall caused a momentary wobble on the markets Monday, though stock rebounded by end-of-day.

Growth and competition were a key topic of discussion during the company’s earnings interview.

The company made clear that international investment will be a key focus going forward, with strides being taken to improve content offering to match local tastes in Asia, Middle East, and Africa.

Ted Sarandos (pictured), chief content officer, pointed to the success of Terrace House, a Japanese reality television franchise.

“It’s incredibly popular and more consistent with the television you’d see in Japan,” he said in the report.

Sacred Games, a Netflix original series in India, was also used an example of an international show Netflix is producing that is Hollywood-level quality.

In North America, key releases this past quarter included A Series of Unfortunate Events, a dark comedy, Santa Clarita Diet, a “zom-com” starring Drew Barrymore, and Ultimate Beastmaster, Netflix’s first competition show that pits athletes from around the globe against a fearsome 600-foot obstacle course.

On the subject of competition from Amazon, Netflix co-founder and CEO Reed Hastings said he isn’t overly concerned, noting the “market is just so vast.”

Using HBO as an example, Hastings said while over 10 years Netflix has grown to 50-million, HBO has also continued modest growth — meaning that the growth of one service doesn’t necessarily mean the demise of the other.

“They haven’t shrunk,” he said. “So if you think about it as, we’re not really affecting them […] and that’s because we’re like two drops of water in the ocean of both time and spend for people. And so Amazon could do great work and it would be very hard for it to directly affect us.”

YouTube, however, is a different beast altogether. With video views of one-billion hours per day, the Google-owned streamer continues to be post numbers that even Netflix is envious of.

“Our viewing is large and growing, but nowhere near as large as YouTube — so we have a lot of YouTube envy,” said Hastings, noting Netflix logs about one billion hours per week.

Netflix also predicts that the advent of digital distribution services such as Sling, Playstation Vue, DirecTV Now, YouTube TV and Hulu’s forthcoming service won’t have much of an impact on Netflix business.

“Our focus also is on on-demand, commercial-free viewing rather than live, ad-supported programming,” according to the company report. “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 Los Gatos, California-based company said revenue rose 34.7 per cent to $2.64-billion in the quarter.

Net income rose to $178-million, or 40 cents per share, from $28-million, or 6 cents per share.

About The Author
Barry Walsh is editor and content director for realscreen, and has served as editor of the publication since 2009. With a career in entertainment media that spans two decades, prior to realscreen, he held the associate editor post for now defunct sister publication Boards, which focused on the advertising and commercial production industries. Before Boards, he served as editor of Canadian Music Network, a weekly music industry trade, and as music editor for As content director, he also oversees the development of content for the brand's market-leading events, the Realscreen Summit and Realscreen West, as well as new content initiatives.