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 became the main global rival to Time Warner-owned HBO, far surpassing that mainly US-based service by 2015. Netflix's now-massive commissioning budget for new content - around $8bn in 2018 - puts it on a par with the biggest traditional Hollywood studios. At the same time the company has expanded its global footprint, initially in Latin America and then Europe and Asia, to cover 190 global markets. By 1Q 2020 it had almost 183m streaming members; almost 70m in North America and another 113m abroad. The UK and Brazil were the company's biggest foreign markets by mid 2019. Revenues for 2019 were $20.2bn, with net income of $1.9bn. However, several challenges lie ahead, not least competition from Disney's own streaming service, that will deprive Netflix of some important content, including major Disney, Marvel and 20th Century Fox movies, as well as similar services from WarnerMedia, Apple and others. Co-founder Reed Hastings remains CEO of Netflix. 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.
Capsule checked 17th April 2019
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Adbrands Daily Update 1st Jul 2020: Netflix named Bozoma Saint John as its new CMO, taking over from Jackie Lee-Joe, who is leaving the company for personal reasons. Saint John is one of the global industry's most high-profile female marketers, having held a succession of key roles including head of marketing for Apple Music and chief brand officer of Uber. Most recently she was CMO of talent and entertainment rights giant Endeavor.
Adbrands Daily Update 22nd Apr 2020: Netflix has been one of the biggest beneficiaries of the global lockdown, as consumers flock to streaming services for ways to fill the time. As a pure-play streamer, its gains aren't offset by losses in other divisions. Its stock price was already at record highs, even before 1Q figures which showed an additional 15.8m subscribers, taking the total figure to 182.9m worldwide. The biggest gains came outside North America. However CEO Reed Hastings warned that the gain could be short-term. "Like other home entertainment services, we're seeing temporarily higher viewing and increased membership growth. We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon." The future remains uncertain, not least because all production on new programming has been suspended. Revenues in 1Q rose 29% to $5.8bn, but net profit more than doubled to $709m.
Adbrands Daily Update 23rd Mar 2020: Disney, Netflix, Amazon, Google's YouTube and Facebook have all agreed to downgrade streaming quality by at least 25% throughout Europe to reduce the pressure on broadband networks during Coronavirus lockdown. Demand is now reaching peak levels throughout the day because of home working and an even greater requirement for entertainment, and is expected to hit new highs this week with the launch of Disney+. Disney even agreed to a request from the French government to delay the launch of its streaming service in France for another two weeks until early April.
Adbrands Daily Update 16th Mar 2020: The repercussions from Coronavirus aren't just affecting retail outlets and public places. Netflix was one of several entertainment companies to halt TV production. All Netflix shows being filmed in the US and Canada are being suspended for at least two weeks, affecting dozens of different productions. Warner Bros TV Studios similarly is halting production on some 70 series, while NBC has hit pause on at least 35 shows. Movie theatres are also expected to close their doors, and several big releases have already rescheduled for later in the year.
Adbrands Daily Update 22nd Jan 2020: Netflix faces stiff competition in the US from rival services, but international growth remains very strong and total revenues hit a new high in the final quarter. For the full year, topline came in at almost $20.2bn, up 28% year on year, while net income soared by 55% to nearly $1.9bn. US net subscribers crept up, topping 61m for the first time, but that figure was below the company's own forecasts from Q3. International subscribers, though, leapt by almost a third to 106m, bringing the total figure to over 167m, a 20% year-on-year increase.
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