Revs, subs surge sees Netflix Q1 smash expectations with 7.4MN net adds | Pay-TV | News | Rapid TV News
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There is no stopping subscription video-on-demand (SVOD) leader Netflix whose Q1 2018 results have shown 43% year-on-year revenue growth, the fastest pace in the history of its streaming business, driven by a 25% increase in average paid streaming memberships.

netflix UK 18Feb2018

This was the result of the company adding 7.41 million streaming subscribers during the three-month period, a new record for a first quarter and an annual growth of 50%. The growth was far beyond the expectation of both Wall Street — where Netflix shares not surprisingly soared on publication of the figures — and the company itself.

Netflix attributed the outperformance spike in new customers to continued strong acquisition trends across the globe which it added was a result of the growing breadth of its content and the worldwide adoption of online entertainment. In the US, it added 1.96 million memberships, just over half a million more than expected, gained handsomely from these and existing customers buying services at a higher price level than in Q1 2017. Indeed, this resulted in 12% ASP growth for the domestic segment. Outside of the US, membership grew by 5.46 million, again up half a million than thought. The non-US segment now accounts for around half of revenue and 55% of memberships. Excluding a currency exchange impact of +$114 million, international revenue and ASP rose 59% and 13% year-on-year, respectively.

Yet this growth did come at a price, that of the investment made in content in a quarter which saw the debuts of scripted original series such as The End of the F***ing World and sci-fi thriller Altered Carbon as well as returning seasons of Marvel’s Jessica Jones, Grace and Frankie, Santa Clarita Diet and A Series of Unfortunate Events. Netflix also noted that investment in international production continued to increase with big, non-English originals like O Mecanismo (The Mechanism) in Brazil, and Spanish-language heist thriller La Casa de Papel which became the most watched non-English series on Netflix ever. In addition, Netflix believes that its expansion in original programming to unscripted shows across several genres meant that it was now comparable to similarly-focused US domestic cable networks.

The company predicts that for the whole of 2018 it will have content expense on a P&L basis of $7.5-$8 billion.

Looking at the second quarter of the year in its results statement, Netflix expects 6.2 million global net additions, 1.2 million in the US and five million elsewhere, a million more than in the year ago quarter. It believes that bundling deals such as those struck with Sky in the UK and most recently with Comcast in the US will allow it to benefit from more reach, awareness and often, less friction in the sign-up and payment process. Netflix anticipates content and marketing spend to be weighted towards the second half of 2018.