That Netflix continues to grow is no surprise to anyone who has been following the company’s path to success, but the speed at which the streaming-service-turned-content-creator grew during 3Q/2017 turned some heads.
Originally, Netflix had projected a growth of about 4.4 million users, but it smashed its own projections by almost a million by the time reporting came around. Those 5.3 million streaming users helped Netflix post a third quarter profit of $130 million.
Netflix’s Investments are Paying Off Big
Netflix made a conscious decision to turn to original content in a time when streaming services were still mainly dishing out content from other big producers like Disney, HBO and Showtime.
It was a huge gamble that was hard to even guess if it could work or would instead spell the death of the promising company. Further down the road, no one is doubting the power of self-investment after the release of these third quarter figures.
Netflix announced that it plans to spend $8 billion on content in 2018, raising an earlier estimate of $7 billion on the great earnings news. Year over year, Netflix stock gained 64 percent in value as of the earnings call, making it worth about $87.5 billion. Now that it’s seen how successful it can be with original content, there’s no slowing the self-investment train.
That $8 billion is significantly more than any of its competitors, including Amazon.com, HBO or Hulu, have earmarked for 2018 content.
Big Names, Big Salaries, Big Draws
One of the most important pieces of the success puzzle for Netflix has been investing in the right people from the start. Its original programming often stars familiar faces that can demand a premium, but also draw viewership of their own. That’s not the end of it, though. The company is picking up high quality, proven talent behind the scenes, too.
For example, Netflix recently signed the creator of ABC hits “Grey’s Anatomy” and “Scandal,” Shonda Rhimes, to an exclusive multiyear deal to develop new programming. In a recent letter to shareholders, Netflix spelled out its intent moving forward, stating that the company’s “future large lies in exclusive original content.”