You will be redirected back to your article in seconds

Netflix Beats Q4 Subscriber Forecasts With Largest Quarterly Gain in Its History

Netflix added 7.05 million new subscribers in the fourth quarter of 2016, handily beating expectations for the period and setting a quarterly record, driving shares to new all-time highs in after-hours trading Wednesday.

For the last three months of 2016, historically a strong quarter for Netflix, the company added 1.93 million U.S. streaming subscribers, and 5.12 million international subs. Analysts had forecast net U.S. streaming subscriber adds of 1.44 million and a gain of 3.74 million international subs.

In after-hours trading, Netflix shares popped more than 8%, after the stock has hit record highs in recent days.

Overall, Netflix posted revenue of $2.48 billion for Q4 2016, in line with Wall Street analyst expectations of $2.47 billion, with net income of $66.7 million (15 cents per share) beating the Street’s estimates of $58 million (EPS of 13 cents).

Netflix — which this week is marking the 10-year anniversary of its U.S. streaming video debut — said global streaming revenue grew 41% year over year to $2.4 billion, while contribution profit rose 74% year over year to $470 million (with a 20% margin).

Netflix now counts 93.8 million streaming subscribers across the globe as of the end of 2016, comprising 49.4 million in the States and 44.4 million overseas.

In its quarterly letter to shareholders, Netflix reiterated that in 2017 it plans to spend over $6 billion on content (on a P&L basis), compared with $5 billion in 2016. The company said it expects a “greater membership impact” from its content slate in the second half of 2017, with new seasons of popular returning shows like “Orange Is the New Black,” “Unbreakable Kimmy Schmidt” and “Master of None.”

For the first quarter of 2017, Netflix projects 5.2 million net adds (1.5 million in the U.S. and 3.7 million internationally). In the U.S., that would represent a decline from 2.23 million net adds in Q1 2016, which the company said “reflects a difficult comparison in the year-ago quarter where we exceeded our net adds forecast by 27%.”

Regarding speculation that the FCC’s net neutrality laws will be weakened or dismantled under incoming President Donald Trump, Netflix said any change — if it happens — “is unlikely to materially affect our domestic margins or service quality because we are now popular enough with consumers to keep our relationships with ISPs stable.”

That said, Netflix added that “strong net neutrality is important to support innovation and smaller firms. No one wants ISPs to decide what new and potentially disruptive services can operate over their networks, or to favor one service over another.” The company added, “We hope the new U.S. administration and Congress will recognize that keeping the network neutral drives job growth and innovation.”

Netflix touted its original programming, calling out “The Crown” — which won the 2017 Golden Globe for best TV drama series and star Claire Foy won for best actress in a TV drama series — “Marvel’s Luke Cage,” and season three of “Black Mirror” as continuing to “generate excitement and excellent viewing all across the world.” The company said “Gilmore Girls: A Year in the Life” debuted in the top 10 in every territory, and Guillermo Del Toro’s “Trollhunters” from DreamWorks Animation, which launched in December, is tracking to be its most-watched kids original ever. (Netflix notoriously does not disclose specific viewing metrics.)

Internationally, Netflix said it is continuing to invest in local programming. “We are focusing on local content that travels pan-regionally or across multiple territories, such as Japanese anime and Turkish dramas,” the company said in the letter, citing its recent long-term pact with Red Chillies Entertainment, the film production company of Bollywood superstar Shah Rukh Khan.

On the competitive front, Netflix cited numerous rivals — noting that Amazon last month launched Prime Video in 200 countries — “which presents both challenges and opportunities for Netflix as we strive to earn screen time.” It said the BBC has become the first major TV network that plans to release new seasons with a “binge-first” strategy (with all episodes available at once a la Netflix) and added: “We presume HBO is not far behind the BBC.”

Pictured above: Claire Foy in Netflix original series “The Crown”

Popular on Variety

More Digital

  • Google Assistant example

    How Google Found Its Voice

    A few years back, Google was actively exploring whether it should launch a male counterpart to Amazon’s female Alexa voice assistant. “When we first launched the Google Assistant, we intended to use a male voice, just to be different,” recalled Google Assistant product manager Brant Ward recently. However, at the time, text-to-speech technology was still [...]

  • Podium Publishing Taps Scott P. Dickey

    Podium Publishing Taps Scott P. Dickey as Chief Executive Officer

    Independent audiobook publisher Podium Publishing has selected veteran media executive Scott P. Dickey as chief executive officer. Greg Lawrence, former CEO and co-founder,  remains as Podium’s publisher and a member of the board of directors. As CEO, Dickey will set and implement the day-to-day and long-term marketing, production and business strategy for the company as [...]

  • "The Stockholm Syndrome" - Pictured: Rajesh

    Inside the Blockbuster $600 Million 'Big Bang Theory' Streaming Deal With HBO Max

    As one of TV’s most popular shows of the past 20 years, “The Big Bang Theory” was sure to command a huge price when the streaming rights were finally shopped in a red-hot market for iconic comedies with large libraries. But “Big Bang Theory” wasn’t shopped widely on the open market before the streaming pact [...]

  • Mark Zuckerberg Facebook

    Mark Zuckerberg Can Be Overruled by Facebook's New Oversight Board on Content Decisions

    Mark Zuckerberg, chairman and CEO of Facebook, can’t be ousted by investors — he owns a controlling interest in the company’s voting shares. But according to the social giant, the new Oversight Board — colloquially called Facebook’s “Supreme Court” — that it is setting up to adjudicate appeals about whether to leave up or take [...]

  • YouTube - Google UK Offices

    Google Launches Ability to Find Key Moments in YouTube Videos via Search

    Google has introduced a new way to find exact moments in YouTube videos through its search engine, with initial partners including CBS Sports. According to Google, search results now will provide links to key moments within the video — if, that is, YouTube content creators have provided the necessary timestamp information to Google. “You’ll be [...]

  • Spotify logo is presented on a

    Spotify VP Paul Vogel Talks Subscription Prices, Label Licenses, Podcasts

    The annual Goldman Sachs Communacopia Conference gives representatives from major companies the opportunity to present to the investment community, and Paul Vogel, Spotify’s VP and head of financial planning & analysis, treasury and investor relations, spoke on the streaming giant’s behalf on Tuesday morning. While many of his comments were statements frequently heard in the [...]

  • Directv Now

    AT&T Sued for Allegedly Creating Bogus DirecTV Now Accounts

    A group of investors sued AT&T, alleging the telco artificially inflated subscriber counts for its DirecTV Now streaming service — including by creating fake accounts. In the federal class-action lawsuit, the plaintiffs allege that AT&T wanted to make DirecTV Now seem more successful than it actually was as another way to rationalize its $85 billion [...]

More From Our Brands

Access exclusive content