Netflix reported sales of $15.8 billion in 2018
Though Google’s YouTube (GOOGL) is the most watched streaming platform in the world, Netflix (NFLX) tops the charts when it comes to revenue, according to Venture Beat. In the last year, Netflix has reported sales of $15.8 billion.
While most of YouTube’s content is user-generated, streaming services are now focusing on the creation of proprietary content. Netflix especially has started to widen its customer base in international markets due to original content that caters to domestic audiences.
Streaming services also license content from traditional TV and film production houses.
Netflix spent over $12 billion on creating content last year
Netflix invested ~$8.9 billion in content creation in 2017, and this figure rose to $12.04 billion in 2018. Netflix stated that it would continue to spend heavily on content going forward. Netflix’s original programming was rated the best among over-the-top subscription and premium TV services, according to a Morgan Stanley survey.
A solid content portfolio means that Netflix continues to grow its paying subscribers. In the first quarter of this year, Netflix added 14.6 million paying subscribers.
Will Netflix increase its subscription price to offset slowing sales?
Netflix’s sales have risen 29.3% annually in the last five years. Analysts expect its sales to rise 24.2% in the next three years. Netflix’s sales are slowing—though not excessively. The company can always increase its subscription rates to offset this decline. It recently increased its basic plan in the US from $7.99 per month to $8.99 per month, while the price for its most popular plan, which features high-definition streaming, increased from $10.99 per month to $12.99 per month.
Netflix also raised the price of its 4K streaming plan, its most expensive plan, from $13.99 per month to $15.99 per month. While increasing subscription plan prices might be viable for Netflix in developed economies, subscribers in emerging markets are very price sensitive and could switch streaming platforms as a result.