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Netflix and Original Kids Programming in 2018

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Goals for kids programs

In a bid to tap different market segments, Netflix (NFLX) is targeting kids programming, which includes animation and Japanese anime.

The launch of these shows could not only help the company drive subscriber growth but could also help it retain members.

From the graph above, we can see Netflix’s overall net subscriber additions (US and international) in the last five quarters.

Netflix has already created a portfolio of kids programs with 60 original shows through self-production and licensing. Popular shows from Fox (FOXA), including Power Rangers and Ninja Turtles, and original Netflix shows such as Beat Bugs and Danger Mouse continue to increase viewership.

Netflix plans to release four to five shows per year, with two already in the pipeline. Twenty new animes are slated to be released in 2018.

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Net customer addition guidance

Netflix anticipates total net subscriber additions of 6.3 million in 4Q17 against 7.1 million added in the 4Q16. The company will exit fiscal 2017 with 21.8 million net customer additions compared to 19 million added in 2016.

In 4Q17, the company aims to achieve 5.1 million subscribers from the international market and 1.3 million from its domestic market. During the quarter, the company added net customers at an average of 5.2 million every quarter against 4.8 million in 2016.

Its international customer additions continue to outpace its domestic additions, which could indicate that the US OTT (over-the-top) market is getting crowded with other low-cost operators, including Amazon Prime Video (AMZN), YouTube TV (GOOGL), Hulu, and HBO (TWX). Netflix’s international expansion could mitigate the softness in domestic customer growth.

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