Oct 17, 2017

Netflix beats expectations, adds 5.3 million new subscribers

Netflix

Netflix blew past user growth expectations, reporting Monday that it added 5.3 million new subscribers last quarter, upwards of 1 million more than expected.

Why it matters: Hitting revenue estimates is a big win for Netflix, given that it poured a ton of money into programming investments (more below), as opposed to focusing on profit. It's also another reminder for Pay-TV providers and TV networks that the traditional cable bundle can't compete with the power of on-demand.

  • "It's increasingly clear that the price/value of the legacy video bundle is unsustainable," says BTIG' media analyst Rich Greenfield. "Netflix is growing subscriptions at higher prices, driving more money to spend on content — a virtuous circle."

Investors are thrilled: Netflix stock reached an all-time high in after-hours trading Monday after the network proved it could continue strong user growth internationally. Its U.S. subscription growth has been slowing in the U.S., but that's because its user base is pretty saturated in North America.

  • In total, it added 850,000 new U.S. subscribers and 4.45 million new international subscribers.
  • Netflix predicts that it will add 6.3 million new subscribers next quarter, which would bring its total to 111.2 million paid subscribers globally.
  • The company also continued to beat expectations on revenue, although profit came in slightly lower than anticipated.

What's next? Netflix's Chief Content Officer Ted Sarandos on Monday's earnings said call the tech giant is inching closer towards producing daily new, original content and will invest a lot more in original films: "We plan on (releasing) about 80 (original films) coming up next year and they range anywhere from the million-dollar Sundance hit, all the way up to something on a much larger scale."

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Data: Kagan, S&P Global Market Intelligence (Netflix, Amazon and Hulu's programming costs are amortized); Chart: Andrew Witherspoon / Axios

Netflix spends more on content than nearly every legacy network: Netflix announced its earnings just days after revealing it would raise its subscription fees by $1 to $11 monthly, likely to subsidize increased content costs.

More U.S. households pay for Netflix than Amazon or Hulu. Per Nielsen, 51.2% of U.S. households subscribe to Netflix, which is far more than its subscription rivals. (Amazon Prime is in 28.6% of U.S. households, while Hulu Plus is in 12.7% of U.S. households.)

Users spend more time on Netflix than its top three streaming rivals combined: Netflix accounts for nearly half of the internet streaming time spent by adults in the U.S., according to Nielsen data.

  • Netflix - 46%
  • Youtube - 15%
  • Hulu - 8%
  • Amazon - 4%
  • Other - 28%

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2 p.m. ET: 640,589 — Total deaths: 29,848 — Total recoveries: 137,270.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 2 p.m. ET: 112,468 — Total deaths: 1,841 — Total recoveries: 918.
  3. Federal government latest: President Trump is considering a quarantine on New York, parts of New Jersey and Connecticut. He signed a $2 trillion coronavirus stimulus bill to give businesses and U.S. workers economic relief.
  4. State updates: A group of Midwestern swing voters that supported President Trump's handling of the coronavirus less than two weeks ago is balking at his call for the U.S. to be "opened up" by Easter. Alaska is latest state to issue stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month. New York moved its presidential primary to June 23, Gov. Andrew Cuomo said Saturday.
  5. World updates: Italy reported 969 coronavirus deaths on Friday, the country's deadliest day. In Spain, over 1,300 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancing.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Trump considers quarantine for states near epicenter of U.S. coronavirus outbreak

President Trump speaks to the press on March 28 in Washington, DC. Photo: Sarah Silbiger/Getty Images

President Trump said on Saturday he is considering a "short term" quarantine of New York, New Jersey and parts of Connecticut — areas congruent with the New York metro area, the epicenter of the novel coronavirus in the U.S.

Reality check: These states have already taken steps to quarantine residents and promote social distancing to combat COVID-19. The governors of New York and New Jersey issued statewide stay-at-home orders last week, and non-essential businesses in Connecticut were ordered to close as of this Monday.

New York is latest state to delay primary due to coronavirus

Photo: Barbara Davidson/Getty Images

New York — the epicenter of the coronavirus outbreak in the U.S. — has moved its presidential primary to June 23, Gov. Andrew Cuomo said on Saturday.

Why it matters: 23 other states and the District of Columbia haven't held primaries yet. The White House is recommending, for now, that Americans practice social distancing and gather in groups of no more than 10 people — while many states have issued stay-at-home orders.

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