Netflix (US)

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 $7bn earmarked for 2018 - 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 mid-2017 it had 104m streaming members, more than half of them now outside the US. 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 premium services; or see here for information on how to subscribe.

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Who are the competitors of Netflix? see Media Sector

Capsule checked 23rd January 2017

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 19th Oct 2017: Netflix yet again topped expectations for subscriber growth in 3Q, pushing its share price up to record highs of over $200 for the first time (though they have since slipped back below that level). The company added 5.3m streaming subscribers during the quarter (compared to the 4.4m predicted), taking total membership to 104m worldwide. That figure is expected to top 115m by the end of the year, despite a recently announced $1 per month increase in US subscriptions. Revenues surged 30% in the quarter to almost $3bn, while net income more than doubled to $130m, though earnings per share were slightly less than analysts had been expecting. Reacting to Disney's recent announcement that it would stop licensing some movie content to third party services in order to feed its own proprietary streaming service, Netflix noted in its letter to shareholders that "our future largely lies in exclusive original content". As a result, it raised its budget for content next year from the $7bn already stated to up to $8bn. Separately this week, Nielsen said it can now offer subscribers household viewing data and demographics for individual Netflix shows, excluding mobile platforms. That data is jealously protected by Netflix, and is not released to any outside parties including the network's own contributing producers. Netflix says the data is irrelevant since it does not sell advertising and it was quick to dismiss Nielsen's offering: "The data that Nielsen is reporting is not accurate, not even close, and does not reflect the viewing of these shows on Netflix."

Adbrands Weekly Update 28th Sep 2017: Interbrand published the 2017 edition of its annual Best Global Brands ranking. Apple and Google retained the top two places and other digital disrupters continued their ascent up the charts at the expense of old-school brands. At valuations of $181bn and $142bn respectively, a gap of more than $60bn separates Apple and Google from any other brands. Coca-Cola remains among the top five, but was pushed out of the #3 slot by Microsoft and is also challenged at #5 by Amazon, whose valuation increased by 29% year-on-year. That jump was beaten only by Facebook, whose 48% surge pushed it into the Top Ten between Samsung and Toyota on one side, and Mercedes-Benz and IBM on the other. The highest new arrival among the 100 was Netflix at #78, with Salesforce and Ferrari entering among the 80s. They took the place of outgoing brands MTV, Xerox and Ralph Lauren.

Adbrands Weekly Update 21st Sep 2017: As the New York Times pointed out, "It was inevitable that a streaming service would win an Emmy for best drama at some point. But no one expected Hulu to get there first." Despite a huge marketing campaign, Netflix was pipped to the post in almost all of the major categories in the US Emmy Awards. The most prestigious drama awards were mostly scooped by Hulu's The Handmaid's Tale, while NBC's Saturday Night Live cleaned up in comedy, winning the prize for best variety sketch series for the first time in two decades. As usual, though, HBO took home the most awards overall, its 16th such sweep. Including creative arts categories not covered in the telecast, HBO took home 29 trophies, including for Veep, Big Little Lies and The Night Of. Netflix was by no means empty-handed at 20, including important nods for Black Mirror and The Crown. The big losers were once again the broadcast networks. Only NBC collected awards in the main awards show; there were none for telecast host CBS, ABC or Fox. That gradual shift of the Emmys (like the Oscars before them) away from mass-market entertainment towards niche or "arthouse" content has also prompted a significant decline in viewers of the awards show. This year's telecast attracted a record low of 3.22m adults in the 18-49 demo, down 10% on last year.

Adbrands Weekly Update 17th Aug 2017: Disney took steps to reduce the future threat from Netflix and other streaming video rivals, by announcing plans for its own equivalent service in 2019. As a result, Disney and Pixar movie releases will no longer be available on Netflix (and presumably other such platforms) after 2018, although the two sides are still in negotiations over the future of movies from the group's Marvel and Lucasfilm units. Disney will also create other proprietary content for the new streaming platform. The group also plans to launch a separate streaming service for ESPN in 2018, offering MLB and NHL games as well as other content. It will complement the existing ESPN cable service not replace it. Both streaming services will be build on the platform operated by BAMTech, in which Disney already has a 33% shareholding. It will increase that holding to 75% for an additional payment of $1.6bn.

Adbrands Weekly Update 17th Aug 2017: In a separate development that demonstrates the growing attractions of the unfettered creativity (and cash) offered by Netflix, superstar producer Shonda Rimes (Grey's Anatomy, Scandal, How To Get Away With Murder etc etc) is to end her partnership with Disney's ABC network to sign a multi-year deal with the streaming giant. She will continue to oversee existing shows on ABC, but any new series will be developed exclusively for Netflix. Rimes said "I'm thrilled by the idea of a world where I'm not caught in the necessary grind of network television," as well as the restrictions on language, nudity and violence. Also in the past couple of weeks, Netflix signed up the Coen brothers to make a Western series, coaxed David Letterman out of retirement to make six hour-long specials, and acquired British comic book publisher Millarworld, which owns rights to a collection of offbeat superhero brands including Kick-Ass and Kingsman.

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