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Netflix Stock Is The Literal Fire Emoji After The Company Surges Past Subscriber Targets

Business

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Shares for Netflix were up 10 percent after adding 5.2 million new subscribers in Q2 2017.

One day after rival HBO notched record ratings for the Season 7 premiere of “Game of Thrones,” Netflix proved that two can very much play at the original content game.

In its second quarter earnings report, the company announced that it had exceeded its own subscriber targets, adding more than 5 million new subscribers in Q2 2017. The momentum pushed Netflix’s subscriber base to 104 million people worldwide.

Shares of Netflix surged on the news, rising as much as 10 percent on July 17 and besting the previous intraday high set in June 2017 ($166.87). MediaPost reported that analysts were predicting a gain of 2.5 million subscribers, so Netflix more than doubled the leading projections.

One area where Netflix wants to gain dominance, in particular, is outside of the U.S. According to TechCrunch, Netflix’s “international segment” accounts for half of its total user-base. During its latest earnings report, the company said it had “underestimated the popularity” of its original content, which they credited for “higher-than-expected acquisition across all major territories.”

With original content as a key driver of growth, Netflix is challenged to build out a robust international strategy that caters to specific markets. The original content within this plan will need to take into languages and cultural nuances across markets, as well as adhere to government regulations, varying market prices, and broadband infrastructure discrepancies. Netflix has had international success with original programs like “3%” (made in Brazil), so the challenges are not unsurmountable.

Of course, Netflix’s gains represent hard hits to the cable industry. As Guy Kawasaki told CNBC, “The entire cable industry is starting to be decimated by Netflix.” Why? Because the Netflix model offers quality, on-demand content while prioritizing audience choice in terms of when, where and how to watch. While these consumer trends are expected to hold steady, some analysts are more cautious in their assessment of Netflix’s future growth. They predict that barriers in international markets like India could impede growth moving forward.




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