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 $6bn in 2017 - puts it on a par 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, to cover 190 global markets. By the end of 2016 it had almost 94m streaming members, with international subscribers on course to overtake the US by mid 2017. Revenues for 2016 were $8.8bn. 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 23rd January 2017
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Adbrands Weekly Update 2nd Feb 2017: President Trump's "travel ban" encouraged an unprecedented pushback from CEOs of major US corporations, reflecting the wider public disapproval of such a blinkered and ill-judged executive order. Perhaps the most high-profile protest came from Google co-founder Sergey Brin, who personally joined public protesters at San Francisco airport. However, other tech bosses including Apple's Tim Cook, Facebook's Mark Zuckerberg, Microsoft's Satya Nadella, Twitter's Jack Dorsey, Uber's Travis Kalanick and AirBnB's Mark Chesky, among others, also voiced their opposition to the ruling. Netflix CEO Reed Hastings said Trump's actions are "so are so un-American it pains us all. Worse, these actions will make America less safe (through hatred and loss of allies) rather than more safe." Starbucks' Howard Schultz wrote to all staff to voice his dismay over Trump's policies on Muslim refugees, Mexico, and the Affordable Care Act and vowed to hire 10,000 refugees over the next five years in the 75 countries where Starbucks has stores. In a joint letter to staff, Ford Motors executive chairman Bill Ford and CEO Mark Fields stated "We do not support this policy or any other that goes against our values as a company." Nike's Mark Parker also wrote to all staff to express the company's opposition to the travel ban. "Nike stands together against bigotry and any form of discrimination. We've learned that on the field of play, where fairness and mutual respect are the rule, not the exception." In the latest development, Amazon, Microsoft and Expedia, all headquartered in the state of Washington, are lending their support to a legal challenge to the travel ban mounted by the state's attorney general Bob Ferguson. However, brands opposing Trump can also expect repercussions from his supporters. Starbucks and Uber both suffered boycott calls on Twitter as a result of their stance, and similar anti-protest protests are inevitable.
Adbrands Weekly Update 26th Jan 2017: Netflix surpassed even its own expectations for growth in the final quarter of 2016, with subscriber numbers surging to 93.8m total viewers, including 49.4m in the US. Both figures were above analysts' expectations, and the company is forecasting in excess of another 5m subscribers for the current quarter. The 100m benchmark is a near-cert before the end of the year. For 4Q, revenues jumped 36% and net profits by 55%. For the year, revenues rose 30% to $8.83bn, while net income soared by 52% to $187m.
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."
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