Media Netflix

Netflix plans to spend more on marketing after adding seven million subscribers


By Minda Smiley, Reporter

April 16, 2018 | 4 min read

Netflix can’t be stopped: the video giant posted a net income of $290m during its first quarter, up from $178m the year prior.


The streaming service added 7.41 million new subscribers in its first quarter, a 50% gain over the year prior, beating the company’s forecast of 6.35 million. Last year, Netflix added 4.95 million new subscribers during its first quarter.

Internationally, Netflix added 5.46 million subscribers, while in the US it gained 1.96 million. Both numbers beat Wall Street expectations. The company estimates it will add a total of 6.20 million subscribers during its second quarter.

The company posted a first-quarter revenue of $3.7bn, up from $2.6bn year-over-year. Netflix’s stock jumped more than 6% in after-hours trading on Monday.

In a note to shareholders, Netflix shed some light on its content strategy. It said shows like the 'Queer Eye' reboot and baking show 'Nailed It' - both of which premiered earlier this year - exemplify its ambitions in the unscripted series space.

Netflix also said it continued to invest in non-English originals like 'O Mecanismo,' a drama TV series that it says is tracking to be one of its most viewed originals in Brazil, during its first quarter. Additionally, Spanish language heist thriller 'La Casa de Papel' became the most watched non-English series on Netflix ever during the period.

On the marketing side, the company said it is investing in "more marketing of new original titles to create more density of viewing and conversation around each title" in the letter.

During the company's earnings call, Netflix chief financial officer David Wells said it has "definitely leaned more into marketing" to promote its content.

"As we create more and more of these titles that no one has heard of, we're going to need to lean a little bit more on promotion, and the website can't do it all," he said. "So I think you're seeing some of that in terms of a nod towards maybe increasing that ratio of marketing spend to content spend. We don't know where the perfect point is, in that we're a company that leans on experimentation. We try things. We turn them over, and then we'll increase or decrease based on the results as we see going forward, and I think that's the approach that you should expect from us."

In light of Facebook's Cambridge Analytica woes and the conversations around data privacy that have cropped up because of the scandal, chief executive of Netflix Reed Hastings said the platform is largely shielded from some of these issues since it doesn't rely on advertising to monetize.

"I'm very glad that we built the business not to be ad-supported but to be subscription. We're very different from the ad-supported businesses, and we've always been very big on protecting all of our members' viewing. We don't sell advertising. So I think we're substantially inoculated from the other issues that are happening in the industry, and that's great," Hastings said.

He said the company will spend more than $10bn on content and marketing and $1.3bn on tech, figures he pointed out to illustrate that Netflix is "much more of a media company" than pure tech.

In January, Netflix's fourth-quarter earnings pushed its market capitalization past $100bn for the first time. Netflix added that 8.3 million new subscribers during its fourth quarter, the highest in its 20-year history. Its impressive quarter came just three months after it raised prices for subscribers in the US, its largest market.

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Netflix, is an American entertainment company founded by Reed Hastings and Marc Randolph on August 29, 1997, in Scotts Valley, California. It specializes in and...

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