Netflix is set to ramp up its marketing outlay over the next two years as it looks to be available in 200 global markets with broadband internet by 2016.
The ambitious target is a revision on the company’s previous 2017 date for when it said it would start to deliver “material global profits”. Netflix’s upbeat outlook stems from strong subscriber growth in the last quarter when it added a record 13 million new members compared to 11.1 million in the same quarter last year, ballooning its global total to 57.4 million subscribers.
It is reflective of the company’s aggressive marketing in the run up to Christmas that saw it spend $207.7m in the quarter, a 59 per cent jump on what it spent a year ago.
A big part of that marketing outlay was spent on promoting its original series “Marco Polo”, which the business said has had a “phenomenal” volume of viewing despite some negative reactions in the press. The rate at which “people are completing the show is comparable to our other big ten original shows”, chief operating officer Ted Sarandos told analysts during the company's fourth quarter earnings call last night (20 January).
Sarandos said its “tough” to get “big subscriber reaction” to a new series that people “haven’t heard of before” but credited the strategy for Marco Polo, which leant heavily on consumer data and social media, as proof it could build sustainably on original content without them having to be universally adored by critics.
Netflix expects similar reactions to the upcoming Daredevil show and Crouching Tiger, Hidden Dragon sequel, which are both part of its original programming lineup, as well the latest seasons of “House of Cards” and “Orange is the New Black”.
The company has said it wants to run as many as 20 original shows within the next five years as well as strike more movie deals with actors - similar to its recent four picture deal with Adam Sandler - as it pursues new ways to attract people willing to pay for content.
Pressure is growing on the company’s expansion into new markets to keep growing subscribers while keeping content costs in line amid mounting competition from HBO and CBS. It is why original content is being positioned as such a core part of the service’s proposition because it is cheaper than licensing content.
The streaming service signalled major changes to its marketing were underway last month when it hired Wieden+Kennedy to shape its pan-European advertising. Following its expansion into the region last year, the business is looking to press home its advantage, particularly given its maturity of internet usage and the cultural similarities of some markets to top market the US.
Netflix chief executive Reed Hastings said the company was “exploring options” in China but admitted it still needed to secure a licence to operate in the country.
“Last year our original content overall was some of our most efficient content”, said Hastings. “We’ll continue to improve our content, our marketing and our service, to eventually achieve ‘must have’ status in most households.
“We’ve found our growth in net adds is strongest in the lower income areas of the US, which would not be the case if there was material price sensitivity. Additionally, we implemented a similar price change in Mexico during Q4, and saw no detectable change in net additions.”
The performance bumped Netflix’s revenue up to $1.48bn, up from $1.17bn the previous year.