Netflix Boosts More Subscribers than Expected

On Tuesday, Netflix Inc. reported a rise in streaming subscribers in the quarter ended in December primarily because of its international expansion. However, despite the surge in overall subscribers, the company still failed to meet its target additions for subscribers in the United States. In the fourth quarter, the company added 5.59 million streaming subscribers overall, which exceeded its prediction of 5.15 million. Now, the entire worldwide customer base for the streaming service has reached 75 million. As far as the current quarter is concerned, Netflix Inc. expects to increase its streaming subscribers by 6.1 million.

In the past 12 months, the value of the company’s shares has doubled and the announcement about subscribers further increased their value by 7%. Nonetheless, even though the company benefited from the increase in its subscribers, its profit saw a sharp decline as the higher cost for overseas expansion and content took a toll on it. Additional international losses were also projected by Netflix for this year. Apart from that, in the fourth quarter, Netflix had predicted that it would add about 1.65 million subscribers in the US, but it fell short of these expectations when the new subscriber additions were around 1.56 million.

As opposed to the same quarter a year before, this marked a considerable slowdown because Netflix had added about 1.90 US subscribers then. In contrast, the company was able to surpass its own expectations in the case of overseas subscribers as instead of adding 3.50 million subscribers as predicted, it ended up gaining 4.04 million international subscribers. The Los Gatos, California based firm announced this month that it would be bringing its service to expanding its service in 130 additional markets. With this move, its total reach would be expanded to about 190 countries. The last big market that the company still has to penetrate is none other than China.

Netflix stated in a letter to its shareholders that there was uncertainty and work in China and it might be able to offer its services in the country this year or the next. Reed Hastings, the Chief Executive at Netflix spoke in a video chat for investors and asserted that gaining traction in new markets would take time. Investing in original programming that can be globally streamed is a major priority for the streaming service. In the previous quarter, it premiered its first feature film called Beasts of No Nation and Marvel series Jessica Jones.

The company mentioned that it planned to launch about 600 hours of programming for this year, which would be up from 2015 when it 450 hours were launched. Ted Sarandos, the Chief Content Officer at Netflix spoke on the video chat that their reason for prioritizing original programming was not because Hollywood studios becoming reluctant to licensing their content. He said that licensing was immensely competitive and programming is sold to the highest bidder, which means that Netflix can get the programming if they bid high. Netflix has boosted its prices for offsetting its rising costs for now.