Netflix continued its growth spurt, posting strong subscriber growth today in the face of intensifying competition in the video streaming market. The company ended its fourth quarter with 110.6 million paid subscribers globally. It added 8.3 million subscribers in total — the highest quarter gains in its history and exceeding its own forecasts.
Netflix credited the strength of its original content slate, which includes popular returning titles such as The Crown, Black Mirror and Stranger Things, and new shows like the limited series Godless, Marvel’s The Punisher and Mindhunter (from director David Fincher), the latter two of which are renewed for a second season.
The original film, Bright, starring Will Smith, was “a major success and drove a notable lift” in subscribers.
“In its first month, Bright has become one of our most viewed original titles ever,” Chief Executive Reed Hastings said in a letter to shareholders. “We’re thrilled with this performance and are planning a sequel as well as additional investment in original films.”
Revenue for the quarter increased nearly 33% to $3.29 billion, beating analysts’ estimates of $3.28 billion. Netflix posted a fourth-quarter profit of $186 million, or 41 cents a share, compared with a year ago when it brought in $67 million or 15 cents a share.
Analysts surveyed by Thomson Reuters projected earnings of 41 cents a share.
Hastings said Netflix would invest more aggressively in content, thanks to its booming subscriber and revenue growth.
“We’re growing faster than we expected, which allows us to invest more in original content than we had planned,” Hastings wrote. “Given our track record of content investments helping to increase growth, we are excited about the growth in future years from the increased investments we are making in original content this year.”
The company took a $39 million non-cash charge in the quarter for unreleased content that it elected not to move forward with. Despite this unexpected expense, Netflix said it was able to exceed its own profit and income forecasts, in part, because of stronger subscriber growth.
Hastings acknowledged the growing competition in the streaming market from tech players such as Amazon Studios — which he predicted would land a “strong new leader” given the size of its content budget, and Apple, which is growing its programming.
Facebook and YouTube are expanding and competing in the free ad-supported part of the video market. Meanwhile, Disney is in the process of acquiring most of 21st Century Fox and plans to launch a direct-to-consumer service in 2019 with beloved franchises.
“The market for entertainment time is vast and can support many successful services,” Hastings wrote. “In addition, entertainment services are often complementary given their unique content offerings. We believe this is largely why both we and Hulu have been able to succeed and grow.”