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How Will Netflix Counter Its Current Slowdown in Subscriber Growth?

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Part 5
How Will Netflix Counter Its Current Slowdown in Subscriber Growth? PART 5 OF 10

How Content Is Driving Netflix’s Subscriber Growth

Content and Netflix’s net subscriber additions

Netflix (NFLX) has maintained that it intends to spend $6.0 billion on content and produce 1,000 hours of original programming in 2017. The company is also increasingly focusing on producing premium content such as The Crown.

NFLX stated on its 1Q17 earnings call that in 2Q17, its viewers will see new seasons of popular shows including House of Cards, Orange Is the New Black, Unbreakable Kimmy Schmidt, Bloodline, and Master of None.

How Content Is Driving Netflix’s Subscriber Growth

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Netflix said on its 4Q16 earnings call that compared to newer shows, its top-rated shows with new seasons tend to be more popular among subscribers. Netflix noted that it has to build excitement around newer shows, which isn’t the case for its more established programs.

The company also pointed out on its 1Q17 earnings call that so far this year, it’s added 8.3 million net subscribers, and considering the new seasons of its popular shows that are premiering in 2Q17, it could have more subscriber net additions in 2H17.

According to research from AllFlicks, Netflix’s original content has an average rating of 3.9 out of 5. According to the report, Netflix’s original programs perform 11.5% better than other content.

Content: A core international subscription growth driver

Original content has been the key factor differentiating Netflix from its competitors in international territories. Netflix offers a mix of local and English-language content in international territories.

Currently, Netflix holds the content licensing rights to its original content. However, its original content is produced by outside studios such as The Walt Disney Company’s (DIS) ABC Studios. Producing its own original content would give Netflix global distribution rights and could add to its revenue in the long term.

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