Netflix to spend over $1bn in marketing this year

Candice Alexander
April 21, 2017

For the second quarter of 2017, Netflix expects to double the 1.68 million total subscriber additions added in the second quarter of previous year.

The service added almost 5 million subscribers during the first three months of the year in roughly 190 countries.

The Los Gatos, California-based company said net income rose to $178 million, or 40 cents per share, compared with $28 million, or 6 cents per share, in the year-ago period.

The streaming firm had 98.75 million subscribers at the end of the first quarter.

At the same time, Netflix is still a ways behind pay-TV channel HBO (with 134 million global subscribers) but HBO saw a quick spurt of growth after adopting an internet-only option (somewhat inspired by the success of Netflix). New domestic members came in at 1.42 million, versus Wall Street forecasts 1.59 million, and Netflix guidance of 1.5 million. The Internet television network reported $0.40 earnings per share (EPS) for the quarter, topping the Thomson Reuters' consensus estimate of $0.37 by $0.03.

Shares of Netflix (NASDAQ:NFLX) opened at 139.76 on Monday.

Series like "Stranger Things", both produced and owned by Netflix, represent the content that will distinguish Netflix, thanks to appeal in multiple demographics, the company said past year. On the top line, sales of $2.64 billion were right on par with estimates. Netflix burned $422.5 million of cash in Q1, and expects to issue additional debt in Q2 to help fund future losses.

"The company is likely to continue to experience quarter-to-quarter volatility, as both the pace of subscriber additions and the path to respectable profitability remains hard to determine", wrote Dougherty analyst Steven Frankel in a research note, maintaining his neutral rating.

"We've said previously subsequent seasons of show that are very popular tend to have more impact on the business than introducing brand new IP [intellectual property]", explained Netflix Chief Content Officer Ted Sarandos during the webcast.

"Buttressing this activity is the substantial earned media coverage around the Netflix brand, technology and content we generate globally through events and activities aimed at journalists and social media influencers".

The streaming company made the pledge as it revealed its global business registered a profit for the first time on the back of revenues that hit the $1 billion mark.

Other reports by VgToday

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