Streaming giant, Netflix, tripled its profits in the final three months of 2017 after the company was able to rack up 2 million more subscribers. The final results translated to a market capitalization of more than $100 billion.
Netflix shares rose 9 percent to over $248 in after-hours trading on Monday. The company managed to establish a hefty stake in 190 countries by spending billions on new programming. In the US, Netflix can be accessed in more than half of all US broadband households.
Worldwide, the streaming giant managed to sway 6.36 million people into buying a subscription. The steady rise occurred between October and December when Netflix released new seasons of their flagship series Stranger Things and The Crown as well as the movie, Bright, starring Will Smith. This surge in subscriptions defied Wall Street expectations of 5.1 million.
According to Richard Greenfield, an analyst at global financial services firm, BTIG, there is a direct correlation between billion-dollar investments into making content and high numbers of subscribers.
“They see a huge opportunity and they are moving as fast as they can to attack it,” he notes,
Netflix ended 2017 with 117.58 million subscribers worldwide, with the US housing 1.98 million.
The company, however, was forced to spend $39 million for “unreleased content” which they decided not to develop any further. A source familiar with the situation claims that the massive expense was intended for several projects involving actor, Kevin Spacey. Netflix cut ties with Spacey after the actor was accused of sexual misconduct. He was written out of the acclaimed political drama show House of Cards which is in its sixth and final season. In addition, the company also had to not release a film which starred Spacey as the late author, Gore Vidal.
Netflix is gearing up for more high-budget productions this year, as well as continuing to build upon existing content. The company is reported to spend $8 billion in 2018 on TV shows and movies, pitting them against other TV and movie giants such as HBO and Disney.
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