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Netflix, facing 'muted' international competition, ups marketing spend by $325m

76 million households watched The Witcher in the show's first four weeks

Netflix has made good on its promise to boost marketing spend in the last quarter of 2019.

The streaming giant doled out $879m in marketing in Q4, a $325m increase from the previous quarter. The company’s full-year marketing costs totaled $2.65bn, up from $2.37bn the year prior.

International expansion, a busy awards season and increased competition from new streaming services such as Disney+ and Apple TV+ are likely driving the uptick in marketing spend.

Netflix added 8.8 million subscribers in the fourth quarter; around 8.3 million additions came from international markets.

The company said slow membership growth in the US and Canada was likely due to price changes and increased competition, while it’s seeing a “more muted impact” from competitive launches overseas.

Netflix is forecasting global subscriber growth of 7 million in Q1 2020 versus 9.6 million additions in Q1 of 2019, which caused shares to fall in after-hours trading.

Netflix attributes the decline in growth to “slightly elevated churn levels” in the US.

Internationally, the streaming giant spent $499m on marketing last quarter and $1.59bn for the year, eclipsing the domestic yearly total by more than half a billion dollars.

Netflix’s giant marketing push combined with its $15.3bn original content bill (projected to hit $17.3bn in 2020) seems to be paying off, however. The company earned 24 Academy Award nominations across eight different films.

Netflix has also changed how it's measuring total views. The company said counting a view as watching 70% of a single episode or film "makes less sense" now that it houses content that ranges from 15 minutes to more than three hours.

Now, all it takes is two minutes to register a view, long enough to indicate that the choice to watch the title was intentional, the company said.

Based on that new approach, 76 million households watched The Witcher over the show's first four weeks – the highest mark for a first season of a series on Netflix. Another 83 million households watched the Ryan Reynolds film 6 Underground during its first four weeks.

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