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Will Netflix’s Revenues Continue to Rise in 2018?

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Netflix in 2017

Netflix’s (NFLX) annual revenues have been rising over the last five years. In 2017, the company’s revenue reached $11.6 billion. It also reported impressive results in 4Q17, during which it exceeded revenue expectations. The streaming giant’s revenue rose 33% sequentially to ~$3.3 billion in the quarter.

Netflix has managed to increase its subscriber numbers despite an increase in its subscription rates in the quarter.

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Revenue expectations for 2018

According to USA Today and predicted by Netflix’s CEO, Reed Hastings, the company could generate revenue of ~$15 million in 2018, much higher than the $11.6 billion it posted in 2017. This growth is likely to come from the company’s rising subscriber numbers and its focus on offering original content to its users. As the Walt Disney Company (DIS) gears up to roll out its streaming service, Netflix is also trying to improve its platform by adding more parental control features to make it safer for kids.

Netflix is also focusing on producing and distributing high-profile original shows such as House of Cards, Stranger Things, The Crown, and Orange is the New Black. These shows provide stiff competition to traditional TV networks such as Time Warner’s (TWX) HBO and CBS (CBS).

Netflix invested $6.0 billion on original shows in 2017, much higher than Amazon’s (AMZN) $4.5 billion and Hulu’s $2.5 billion spending on content. Netflix plans to continue to invest in original content to gain additional subscribers in 2018 and beyond. The company plans to spend $7.5 billion–$8 billion this year to generate original content.

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