Streaming media service Netflix has set about overturning the traditional hierarchy in global media. Originally launched in 1997 as a mail order DVD rental company, it reinvented itself in the late 2000s as an internet broadcaster streaming on-demand movie and TV content to monthly subscribers. Its most significant breakthrough was the move into proprietary content, commissioning high-quality scripted drama and comedy - including the series House Of Cards and Orange Is The New Black - available exclusively to its own subscribers. As a result, it has begun to position itself as the main global rival to Time Warner-owned HBO. However its massive commissioning budget for new content - around $5bn in 2016 for roughly 600 hours of new programming - puts it on a part with the biggest traditional Hollywood studios. At the same time Netflix has expanded its global footprint, initially in Latin America and more recently Europe and Asia. By Spring 2016 it had more than 80m streaming members, the majority still in the US, but with another 35m spread across 190 international markets. Revenues for 2015 were $6.8bn. Co-founder Reed Hastings remains CEO. According to company legend, he first decided to launch the company after he was fined $40 by original video rental giant Blockbuster for the late return of the movie Apollo 13. Ted Sarandos is chief content officer, responsible for commissioning new content. Adbrands does not currently profile this company but subscribers may access account assignments and contact information. The searchable account assignments database is available to full subscribers to Adbrands.net premium services; or see here for information on how to subscribe.
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Capsule checked 27th July 2016
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Adbrands Weekly Update 12th Jan 2017: Last weekend's Golden Globes ceremony kicked off the 2017 Awards season, and earned Netflix its most prestigious accolade to-date. Lavish royal series The Crown was named Best Television Drama, while Claire Foy, playing Queen Elizabeth, collected the trophy for Best Actress in drama. It was Netflix' first ever Best Drama award from any major organisation, and is unlikely to be the last, with The Crown firmly on-course to pick up a shelf full of other accolades before the year is out. Despite more nominations than any other TV producer, HBO went home empty-handed. In movies, La La Land, from mini-major Lionsgate, set a new record for wins at the Golden Globes, taking home the trophy in every major category for which it was nominated: seven in all. The previous record holder was Midnight Express, way back in 1979, with six trophies. Since then, no film has received more than four.
Adbrands Weekly Update 20th Oct 2016: Netflix shares bounced back to their highest level since last December following far better-than expected 3Q results. After doubling last year, the company's stock has sagged in 2016 as global growth subscriber growth steadily slowed, despite a massive rollout to 130 countries. Perhaps that was only a temporary lull. A total of 3.57m new subscribers for the latest quarter was more than 50% higher than the company's own guidance (though still slightly below Q3 2015). Strongest lift was international, with 3.2m new users, compared to 370,000 in the US. A hike in pricing prompted a 37% lift in revenues to $2.2bn, the first time quarterly sales have topped $2bn. Total customer base is now around 83m users worldwide. The group said it expects to come in just below 92m by the end of the year. Total investment in new program content this year will be well over $5bn, making Netflix the third biggest content creator globally after Disney and NBC.
Adbrands Weekly Update 21st Jul 2016: Netflix added far fewer new users than it had predicted in the latest quarter, prompting a slide in its share price. In the weakest growth in three years, US net adds were just 160,000, against predictions of 500,000, while international sign-ups were 1.52m, compared to expectations of 2m. That resulted in below-forecast revenues for the quarter, although earnings actually topped targets as a result of lower content costs. Analysts were also worried by the company's lowering of expectations for the current quarter. Netflix is suffering increased churn as a result of cancellations from longer-serving customers. Their monthly rate had up until recently been "grandfathered" at its original level of either $7.99 or $8.99, depending on when they joined. It increased this quarter to the $9.99 paid by new subscribers. "Whatever the price is for something, people don't like it to go up," said CEO Reed Hastings in a call with analysts. "We apologize for the volatility; I know it's not easy on everyone. The big picture is very much intact."
Adbrands Weekly Update 21st April 2016: Investors' love affair with Netflix showed signs of stalling following results for 1Q. Those numbers were themselves strong. The streaming service added more subscribers that had been expected in the quarter - 6.74m new customers against projections of 6.1m - as international growth offset slowing domestic performance. Total subscriber numbers reached 81.5m. Revenues and profits were also both at record levels. However the group warned that growth for the current quarter would be down sharply on both the most recent quarter and the year-ago period, with new adds forecast at just 2.5m for 2Q, less than half analysts' expectations. That prompted a sharp fall in the company's share price, which was already trading well below past highs despite the resurgent stock market. The stock peaked at over $130 in December, but fell below $95 mid-week.
Adbrands Weekly Update 21st Jan 2016: Netflix reported another spectacular surge in subscribers for its final quarter. It added another 5.6m users worldwide, bringing the global total to a whopping 75m. Of those, 45m were in the US and another 30m globally. International adds were well ahead of predictions, but US fell slightly short. Netflix expects to sign up another 6.1m this quarter as a result of the latest mammoth rollout to another 130 countries. Total revenues for 2015 jumped 23% to almost $6.8bn. However net income more than halved to $122m, reflecting a big increase in losses relating to the global rollout. There are definitely some clouds on the horizon: notably growing concerns among content owners that they are undercutting their own ratings and the existing US pay-TV market by licensing material to Netflix.
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