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 the end of 2019 it had over 167m streaming members; more than 61m in the US and another 106m 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 the global launch of Disney's own streaming service in 2019, that will deprive Netflix of some important content, including major Disney, Marvel and 20th Century Fox movies, as well as a similar though less extensive service from Apple with proprietary content. 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.
Capsule checked 17th April 2019
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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.
Adbrands Daily Update 17th Oct 2019: Netflix reported 3Q figures that were slightly below expectations but better than some observers had feared. Though the company missed its subscriber growth targets for the second consecutive quarter, it did add more than half a million US subscribers, repairing the damage suffered in 2Q, when domestic subscribers declined for virtually the first time in the company's history. However, that add-on was below projections, as was the total 6.8m subscribers gained internationally. The company blamed the push-back from an increase in subscription rates. However, these helped revenues to jump over 30% to a new quarterly high of $5.2bn - the first time ever over $5bn - while net profit soared by two-thirds to a best-ever $665m.
Adbrands Daily Update 7th Oct 2019: Ahead of the imminent launch of its Disney+ streaming service, the House of Mouse has ruled that it will not accept advertising on its other entertainment channels - for example, US network ABC, cable channels such as Freeform or streaming service Hulu - from Netflix. It had originally decided not to accept ads from any rival streamer - AT&T, Comcast and Apple are among the many rivals who also have new OTT services - but then backed down from that position. It will now accept ads from Comcast's Peacock, AT&T's HBO Max and Apple+. Just not Netflix. There's one exception: ESPN will still run Netflix advertising (if it is booked).
Adbrands Daily Update 19th Jul 2019: Netflix spooked investors with subscriber totals for 2Q that were far below its own earlier projections. More worryingly perhaps, US paid subscribers declined for the first time for almost a decade from 60.2m in 1Q to 60.1m. That was offset by positive - though weak - growth in international. The total figure came in at 151.6m subscribers worldwide. Revenues continued to grow, up more than $1bn year-on-year to $4.9bn, helped by subscription price increases. But net income fell sharply as a result of a steep tax charge
Adbrands Daily Update 10th Jul 2019: Netflix will lose its two most-watched shows next year as competition between streaming services heats up. According to Nielsen, 'The Office' and 'Friends' were the most popular series on the streaming giant during 2018, notching up airplay of 52bn minutes and 33bn minutes respectively. However, their makers NBC Universal and Warner Bros have chosen to call back rights ahead of the launch of their own rival streaming services in 2020. After that 'Friends' will air exclusively on WarnerMedia's HBO Max service, and 'The Office' on the as yet unnamed NBCU channel. (Netflix will retain rights to 'Friends' internationally, at least until it rolls out streaming services in other markets). Though Netflix spends billions of dollars on proprietary content like 'Stranger Things' and 'The Crown', more than 70% of viewing minutes - according to Nielsen - are spent on bought-in content. 'Grey's Anatomy', 'NCIS', 'Criminal Minds' and 'Parks & Recreation' were also among the top ten shows. Only two inhouse series - 'Orange is the New Black' and 'Ozark' - were among the ten most watched. Separately, Netflix named Jackie Lee-Joe as its new global CMO, taking over from Kelly Bennett. Lee-Joe was previously CMO of BBC Studios.
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