Netflix experienced more growth in the first quarter of 2018 than had been expected. It added 7.41 million new subscribers in Q1, giving it a total subscriber base of 125 million worldwide. Its next closest competitor is Amazon, who had 90 million subscribers in September of last year. Amazon has a bit of an advantage over Netflix in the subscriber count, though, as all Amazon Prime members are subscribers to the video on demand service, even if they never use it. Hulu trailed far behind both with only 17 million subscribers as of January, although it is only available in the US.
Netflix does not rely on ad revenue in its business model. This is a large advantage in the middle of all of the concerns over user data privacy being leveraged in order to bring more revenue into several large tech companies.
Netflix also seems to be striking some interesting deals. While “cutting the cord” with cable companies has become a rather popular topic of discussion over the last few years as streaming services have become more prevalent and network speeds more reliable. Netflix is now partnering with cable companies such as Cox, Comcast and Verizon to bundle a Netflix subscription with their standard cable packages. This is an advantage to the cable companies, as a partnership with Netflix may dissuade some customers from leaving the cable paradigm and may even convince new subscribers to join, as with Verizon offering a 1-year Netflix subscription free to new subscribers. It is also advantageous to Netflix because, as BTIG Media Analyst Rich Greenfield stated, “Who wants to call up Comcast and deal with them to cancel” your Netflix subscription?
Netflix is also pouring billions of dollars into producing new original content, which they have proven to be very good at. Original content that is available exclusively on the Netflix platform will lure in new subscribers and help keep existing ones. When everyone is talking about Stranger Things, and you can’t watch it because you don’t have Netflix, the pressure to subscribe goes up. I convinced at least one friend to join Netflix because I kept talking about a few of the original shows and telling her that she and her husband really needed to be watching them.
Netflix knows that its original content is a huge draw, and is willing to invest the money to keep it up because its revenue comes from subscriptions. With outstanding original content and creative marketing strategies like the partnerships with cable companies, Netflix is showing no signs of losing its dominance of the streaming video market. Apple and Disney are both planning to launch new streaming services next year, and it looks like Netflix is positioning itself well to meet the new competition head-on when it comes.