Netflix’s success represents a fundamental cultural shift in American entertainment.
Americans are streaming TV shows and movies more than ever before. At the forefront of this shift is the world’s largest subscription streaming service — Netflix. The online movie and TV streaming company released its new quarterly sales and profits report on Wednesday, showing staggering statistics.
Netflix saw its stock rise 16 percent in the fourth quarter of 2013 due to a whopping 2.3 million new subscribers. The entertainment giant has an estimated stock market value of over $20 billion, recording a closing price of $386 a share on Jan. 24. It brought in $1.2 billion in revenue, which is up $1.1 billion from the prior quarter. The company has a net income of $48 million, up from $32 million .
The shock value (to Netflix’s competitors, at least) is that the company still has plenty of room to grow. With 33 million Americans already in hand, Netflix projects a gain of 2.25 million domestic subscribers in the first quarter of 2014 . In a letter to shareholders on Wednesday, Netflix called the figures “a great outcome,” but also referenced “years of member growth ahead.”
The company is expanding its reach overseas and will build on its 10 million international subscribers . It has been operating at an international loss due to expansion efforts, but those numbers are decreasing. The company has seen gain in the international market, and Netflix has plans up its sleeve to launch a “substantial” European expansion later this year.
So what makes Netflix so successful? It delivers more programming than any other company in their field. Rather than quality, the sheer quantity of content being delivered boosts network value. This isn’t to say quality isn’t an important factor, but there are a few reasons that explain why Netflix is on a different level than organizations like HBO. The online streaming service provides consumers with a plethora of instant programming that’s accessible at all times on a multitude of devices. The company has successfully made Netflix accessible nearly anywhere and at any time. Subscribers can fire up their favorite episodes of “Breaking Bad” not only on their TV or computer, but also on their smart phones, tablets and gaming consoles.
“Binge-watching,” a term that is rightfully correlated with the accessibility of Netflix, is defined as the act of watching two or more episodes of a single TV show in one sitting. This is the new norm in America, and no service is better equipped to fulfill a consumer’s binge-watching needs than Netflix.
In a poll released in December, Netflix found that 61 percent of people surveyed binge-watch shows regularly, 73 percent see binge-watching in a favorable light and 79 percent thought that binge-watching actually made them enjoy the shows more. These numbers support the company’s method of releasing full seasons of programs at once, which allows the consumer to decide when and at what pace they want to view.
Friday, the entertainment giant released its second original documentary of 2014, “Mitt”, a documentary about former presidential candidate Mitt Romney. In 2013, Netflix debuted a plethora of original programming that included 21 original series, stand-up comedy specials and documentaries.
The lineup proved to be a great success. Shows like “House of Cards” and “Orange Is the New Black” headlined the popular original Netflix content. True to form, the new series were all released in whole seasons rather than in weekly episodes, which appealed to binge-watchers. Several of the shows have been nominated for awards — “House of Cards” alone garnered four Golden Globe nominations and nine Primetime Emmy nominations, and secured more than one win — which confirms their quality and marketability. Delivering original content has paid off, and Netflix will most likely expand the effort in upcoming years.
In the early 2000s, the now-extinct rental service Blockbuster passed up the opportunity to buy Netflix for $50 million. Ten years ago, it was customary to rent DVDs, and Blockbuster was at the height of its power. Today, due to the popularity of online streaming, the last Blockbuster stores are closing their doors.
With streaming, Netflix meets a need subscription rental companies such as Blockbuster failed to consider. It is at the forefront of the fundamental shift in how Americans watch television and movies, and it doesn’t look like that will change anytime soon.