Netflix was conceived in 1997 by Reed Hastings (the current CEO) and Marc Randolph. Both had previous in the West Coast tech scene – Hastings was the owner of debugging software firm Pure Atria, while Randolph had cofounded, and then sold computer mail order company MicroWarehouse for $700 million
Netflix.com started life as a DVD rental service in 1998; an online rival to the then dominant Blockbuster Video. Hastings had claimed that he was spurred to found Netflix after being fined $40 by Blockbuster for the late return of Apollo 13, though he later revealed the story was a fiction intended to help foster a creation myth.
The then nascent DVD format, introduced to the US in 1997, was key to the firm’s business model, providing a format lightweight and compact enough to work in a mail order context. Around the turn of the century, Netflix introduced the subscription model, moving away from single DVD rental. The idea was now that subscribers could rent as many DVDs as they could watch, without incurring any extra costs or late fees. Around the same time, the first Netflix algorithm was introduced, utilising user ratings to select films that might appeal to any given subscriber.
Netflix grew strongly in the early years of the century, from 300,000 users in 2000, to 600,000 in 2002, to 4.2 million in 2005 – profiting from the increasing affordability of DVD players. Growth did not come without hiccups. Netflix suffered quite badly in the wake of the dot-com bubble burst in 2001.
The preceding year, the growing company caught the attention of the rental behemoth it had been intended to topple, with Blockbuster offering to buy the loss-making Netflix for $50 million. As Blockbuster closed its doors forever in 2013, standing as a monument to the folly of not adapting business models to the times, Netflix will no doubt be relieved that they did not accept the offer.
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Find out more >The company made its IPO in 2002 on Nasdaq. But it was five years later that it introduced the feature which changed everything, and with which it is now synonymous: streaming. In the following years it partnered with various technology companies to diversify the ways one could access Netflix. By 2010, you could watch Netflix through a PS3, an Xbox360, or an Apple device. Central to its success in the new format was the algorithm, that helped to steer users towards the content that they would most enjoy. Content that they could then ‘binge-watch’.
2010 was also the year it went international, launching in Canada. Latin America would follow in the 2011, while the conquest of Europe took place gradually over the next few years, followed by the Asia Pacific region. Today, Netflix is a truly global phenomenon, with a full global rollout in 2016. Indeed, only citizens of North Korea, Syria, China (mainland), and Crimea are denied the binge-watching pleasures of the streaming service.
Netflix added another differentiator in 2012: original content. Lilyhammer led the charge in 2012, but it was House of Cards and Orange is the New Black, both launched in 2013, that really changed everything. Netflix is now seen a heavyweight produced of original series, with a number of Emmys to its name. In 2018, Netflix was nominated for 112 Emmys – ending a 17-year run by HBO as the top-nominated network.
Since 2015’s Beasts of No Nation, Netflix Originals content also includes films. Indeed, Netflix has been behind some of the biggest and most highly-acclaimed films in the world in recent years. These include Oscar nominees such as Martin Scorsese’s The Irishman, Alfredo Cuaron’s Roma, and Noah Baumbach’s Marriage Story. Indeed, Netflix earned more nominations than any other film studio at the 2020 Oscars.
But in terms of awards, the first Emmy Netflix ever won, in 2012, is perhaps the most illustrative: an Emmy Engineering Award – given to those individuals or organisations that have profoundly changed the way we watch television. Netflix, it is fair to say, has profoundly done this.
We’ve compiled and analysed Netflix statistics from around the web below. Read on to find out about who watches Netflix, how they watch it, how much revenue Netflix brings in, and more.
Table of Contents
Key Netflix Statistics
- 137.1 million Netflix users as of Q3 2018, 57% of which are international
- 51% of US streaming subscriptions are to Netflix
- 9.1 million UK Netflix subscribers have helped streaming services overtake traditional television providers
- In the US, there is gender parity in the Netflix subscriber base
- Netflix demographics mirror overall US population in terms of wealth, education, and age
- Netflix itself assigns users to three to five of 1,300 ‘clusters’, based on their viewing preferences
- 23 languages are currently supported by Netflix
- 50% of US Netflix subscribers use it several times per week
- In 2017, Netflix subscribers streamed one billion hours of content per week
- Mexican Netflix subscribers are the most likely to log on every day
- January 1st is the biggest streaming day of the year
- Netflix accounts for 8% of the total time people spend watching videos
- Netflix revenue in Q3 2018 stood at $4 billion
- Netflix’s market cap in October 2018 was $131 billion, with shares priced at $300
- Netflix’s Q3 2018 net profit was $403 million. The equivalent for the whole of 2017 was $559 million
Netflix User Statistics
As of Q3 2018, Netflix users number 137.1 million in total. Of these, 57% of these users come from outside the US.
Total Netflix subscribers, US vs international
Netflix continues to grow at a strident pace, exceeding expectations for user growth in the third quarter of the 2018. Nearly 7 million new subscribers joined the streaming service (net). 1.1 million of these new Netflix users were US-based, eclipsing the predicted 0.7 million prediction. The international picture was the same, with 5.9 million new users signing up, compared with 4.5 million predicted. It should be noted that these predictions were made by Netflix, while analysts predicted much stronger growth – albeit still less than reality: 0.9 million in the US, 5.1 million internationally.
Year-on-year, 2018 up to Q3 represents the strongest growth seen in the Netflix user base over the past five years. Netflix anticipates this to continue into the fourth quarter, with an estimated 9.4 million net subscribers predicted to join the service.
Netflix viewership statistics, by year
The year has not been perfect. Netflix user growth in Q2 2018 fell below analysts’ expectations of 1.2 million in the US, and 5.1 internationally (again, this was higher than Netflix’s own estimation). In reality, the gains were 0.7 million US net adds, while 4.5 internationally.
Netflix is not, however, quite the top dog in terms of streaming content. In the US, that title still belongs to YouTube. If, however, we take into consideration that users have to pay for a Netflix subscription, Netflix’s performance in this metric is serious impressive. Chief rival Amazon lags far behind, with not too much more than half of Netflix’s user base at the time of the below eMarketer study.
US Netflix user numbers vs other streaming services
Whichever service comes out on top, it’s clear that streaming is becoming the predominant method through which people access film and television content. The CNBC All-American Economic Survey 2018 found that 57% of Americans use a paid streaming service. Netflix dominates, with a market share of 51%, with Amazon Prime in second with 33%.
US streaming services market share
Streaming has not yet overtaken traditional cable television in the US. CNBC’s survey shows that for every two people that rely solely on streaming, three rely solely on television. The combination of both mediums, however, was the most commonly elected choice.
Netflix vs cable statistics
The Netflix revolution is by no means limited to the US. In the UK, the number of subscribers to streaming services (15.4 million) actually overtook the number of people who use traditional satellite or cable television services (15.1 million) in 2018. Netflix is by far the dominant service, with 9.1 million users as compared with Amazon’s 4.8 million.
It’s not just a numbers game. A YouGov survey of 2,000 Netflix subscribers and 1,000 Amazon Prime subscribers found some differences between the demographics. Namely, Netflix users tend to be younger, with just under 50% under the age of 35. Only a third of Amazon Prime subscribers fit into this age bracket. In terms of gender, Netflix skews slightly female, while Amazon enjoys something approaching parity.
UK Netflix vs Amazon Prime user demographics
As an interesting side note, the same poll found that these demographic trends seem to play into the sorts of actors subscribers would like to see. Amazon Prime users prefer to see established male Hollywood stars. Netflix subscribers, on the other hand, look to up and coming actors, and strike a far healthier gender balance in their top 10 (albeit still some way from a 50-50 split).
Netflix penetration by country
The UK is only 10th in terms of market penetration globally. The US leads the way, with two-thirds of digital video viewers logging into Netflix at least once a month. Northern and Western Europe are well represented in the top-10 in this metric, with Australia the only country from the Asia-Pacific region featuring.
Top 10 countries for Netflix market penetration
eMarketer reports that Netflix’s presence is slightly weaker in Asia. Higher competition from local providers, and a lack of localised content are among the challenges faced in the region.
The latter is less of an issue in Japan, with Netflix actually boasting more Japanese than American titles. Market penetration is still low in the world’s third-biggest economy, however: 16% of internet users or 17% of on-demand subscribers. This is despite heavy investment. Among the challenges faced is the continued popularity of free-to-air channels, popular with older consumers.
In India, the market is not yet mature, with low-cost traditional TV still dominant. Despite this, eMarketer predicts that Netflix’s Asia-Pacific market share will increase from 12% to 14% by 2020.
Netflix demographics
The New Netflix Nation – a compilation of Netflix statistics put together by CivicScience looks into the demographic trends of US Netflix users – comparing 2015 trends with 2017.
Though the time period is relatively short, some changes occurred. Perhaps most notably, the Netflix user base is more evenly split between male and female viewers: a 49:51 ratio (in favour of female viewers), compared with 45:55 reported up to 2015.
The median age of Netflix users now seems to fall in the 35-44 bracket, whereas in the 2015 study, youth dominated, giving a median in the 25-34 bracket. The proportion of Netflix users fell as you went up in age bracket in the 2015 study. The under-25 bracket was by far the biggest in 2015, and the over 65 the smallest, with a simple slope in between. The 2017 study on the other hand, describes an arc, with the proportion of users more in line with the proportion of the general populace that falls into each respective age bracket – representative of the deep market penetration of Netflix.
US Netflix users by age
Netflix’s appeal is not limited to those with a certain level of educational attainment. There’s nearly a perfect match between the educational levels of Netflix users and the overall US population. Everyone from high school graduates to graduate degree holders loves to tune in to a few episodes of Orange is the New Black. There’s was little change between 2015 and 2017.
US Netflix users by education
In terms of income, we once again see proportions in line with the wider population. As we might expect, penetration is slightly deeper as we climb income brackets. This differs from 2015, where Netflix users were more likely to fall into lower income brackets. No doubt this is closely connected with the lower average age.
US Netflix users by income
While these traditional demographic trends are illustrative, they are not useful in predicting what sort of content any given user might be interested in. VP of product, Todd Yellin went so far as to say in 2016, “Geography, age, and gender? We put that in the garbage heap.”
Netflix is driven instead by globally-collected data. Users are categorised not by who they are on paper, but by what they like. The subscriber base is split into 1,300 clusters, three-five of which are assigned to each user, weighted based on viewing preferences.
Taste around the world is not as different as was first thought. Accordingly, Netflix is working on making itself available in a range of different languages. 23 languages are currently supported.
Such is Netflix’s commitment to making content available, that it administers its own online test (Hermes) to ensure would-be subtitle writers are up to scratch. To give an idea of the scale of the operation. Chelsea Handler’s talk show alone reportedly called on 200 translators.
Original content is produced around the world, and in a range of languages. Despite mainland China being one of the handful of places in which Netflix is not available, Netflix even has commissioned content in Mandarin.
Netflix Usage
A study by Civic Science found that US Netflix subscribers are getting their money’s worth. Close to half use it multiple times per week, while a further quarter use it several times a month (the presence of those who subscribe but don’t use the service can be ascribed to parents and grandparents who pay for the service for children or grandchildren).
How often do subscribers watch Netflix?
The above figures refer to those who only use Netflix. Interestingly, those who subscribe to Netflix in conjunction with another service seem to use Netflix more often, with close to 60% logging in a few times per week.
How often do subscribers to two streaming services watch Netflix?
The trend continues for those with three subscriptions, with two-thirds watching multiple times a week. Perhaps the takeaway is that users with more subscriptions are more deeply engaged with streaming. And that those who are spending more money will be more inclined to make sure they’re getting their money’s worth.
Worryingly for those with a stake in traditional entertainment forms, the same study shows only 13% of Netflix subscribers go to the cinema on a monthly basis. Once a year is enough for 31%, while 25% never go. Television still looks safe though, with only 18% not watching live TV. Nearly half (48%) watch cable, and a further 18% satellite.
‘Binge-watching’
In 2013, rather than staggering the release of series over a number of weeks as with traditional television, Netflix began to release entire series at once. With the need to “tune in next week” removed, the cultural phenomenon of the ‘binge-watch’ was born – which, as it sounds, simply means watching episode after episode in rapid succession until there’s nothing left to watch. It entered our lexicon so decisively, that Collins English Dictionary chose ‘binge-watch’ as its word of the year in 2015.
Netflix does not release viewing figures as a rule. It does, however, release the occasional curiosity. For instance, in early 2018, it releases figures for the shows which are most commonly subscribers’ first-ever binge – the ones that reflect a change in their viewing habits. To count as a binge, the viewer must finish an entire season in one week.
This is top-20 first binges, a mixture of original and licensed content.
- Breaking Bad
- Orange is the New Black
- Stranger Things
- Prison Break
- Narcos
- House of Cards
- The Inbetweeners
- American Horror Story
- Peaky Blinders
- Pretty Little Liars
- Sons of Anarchy
- Dexter
- Gossip Girl
- Power
- The Vampire Diaries
- Suits
- Gavin and Stacey
- The Crown
- Making a Murderer
- Homeland
Most-binged 2017
Netflix also releases an end-on-year bingeing report, based on viewing trends and survey data. The infographic covers the shows that were most devoured, as well as those that were savoured (those watched for the slightly low bar of less than two hours a day), those that brought people together, and those that got viewers ‘cheating’ – that is secretly watching an extra episode of a series that you were watching with someone else…streaming is a serious business.
The report also noted that Mexicans are the most likely to watch Netflix every single day. Perhaps one of these Mexican viewers was responsible for the report’s most eye-catching stat: that one subscriber watched Pirates of the Caribbean: The Curse of the Black Pearl 365 times. He or she would have probably started on January 1st – the biggest streaming day of the year.
2017 on Netflix – A Year in Bingeing
In total, Netflix revealed that viewers were getting through 1 billion hours a week of Netflix content per week. That’s a lot, but it only accounts for 8% of the total amount of time people spend watching video.
To break that down, that 140 hours of Netflix viewed per day. The average user, by this measure, spends just under 50 minutes daily watching Netflix.
Original vs. licensed content
As of August 2018, Netflix had released 88% more original programming than it had over the equivalent period in 2017. Goldman Sachs estimated that Netflix’s 2018 content spend could be as high as $13 billion – totally eclipsing the $6.3 billion spent in 2017 (as well as the public projection of $8 billion). Around 85% of this goes on original programming.
As mentioned above, Netflix is secretive about viewing figures. It estimated, however, that despite this high spend, 80% of Netflix streams are for licensed content that first aired elsewhere, with 42% of viewers never viewing original content.
Fortune, which, reports these figures, warns that the study from which they are taken dates back to early 2017 – since when Netflix’s strategy has been far more focused on original content. It is still thought that licensed content still has the edge on Netflix Originals in terms of streaming numbers.
Netflix viewing devices
Netflix might have revolutionised the way we watch television, but that doesn’t mean that we no longer use televisions themselves. While the most popular device used to sign up to Netflix is a computer, followed by a phone, 70% of streams are viewed on televisions (though users tend to go through a period where they uses their computers as well). This is even the case following the introduction of downloading content to view offline in 2016.
Netflix devices: sign-up to six months
This, according to Recode, applies whatever the genre, with television as dominant for children’s content as for documentaries. To facilitate this, Netflix has struck a deal with 60 TV operators around the world (starting with Virgin in the UK in 2013) to offer apps through cable or satellite television boxes.
Netflix Revenue Statistics
Netflix revenue for Q3 2018 stood at $4 billion – the result of the exceeded expectations in user growth mentioned above. This is in line with predictions, and is a 36% increase on the equivalent point in 2017.
While Q2 was not a strong as predicted in terms of user growth, it was close to matching predictions for revenue ($3.91 billion vs $3.94 billion). The reported figure also represented a 40% increase year-on-year.
Netflix quarterly revenue has grown more than fourfold since 2011. It has more than doubled since 2016.
Netflix revenue, Q1 2011 to Q3 2018
Domestic Netflix users still account for the lion’s share of income. Though with international growth outstripping domestic in terms of both users and revenue, we can expect this to change – possibly even by the end of 2018. Domestic DVD revenue still contributes a declining and relatively nominal amount. As recently as 2013, however, it contributed as much as 21% of revenue.
Netflix revenue, domestic vs international, 2014-2017, millions of USD
Netflix Valuation
Netflix went public relatively early in its lifespan – notably when DVDs were still its lifeblood. Netflix IPO was May 23rd 2002 (Nasdaq), with stock priced at $15 a share, rising to $16.75 at the close of trading – or $1.20 per present-day share after adjusting for stock splits.
Stock price and market cap has been on a confident upward trend (bar a hiccup in 2011) since Netflix began its international expansion, rising particularly rapidly in the wake of its global rollout in 2016.
Netflix market cap history
To pick a few random points, in October 2007 you could pick up Netflix stock for $3.60, setting the market cap at $1.52 billion. Three years later, shares of $24.01 gave a Netflix a market cap of $9.13 billion. Jumping ahead five years to October 2015, you could purchase Netflix stock for $100.04, with the company valued at $43.2 billion. That investment would have doubled in value by October 2017, at which point shares were valued at $199.54, and the market cap was set at $89.1 billion.
Using Yahoo Finance data, Business Insider calculated if you had invested $1,000 in the nascent public business on the first day, you would have $300,000 in May 2018, when shares reached a record high of $350.41.
In May 2018, Netflix’s market cap of $151.93 billion put it ahead of telecoms juggernaut Comcast ($145.27 billion) and Walt Disney ($151.63), making it briefly the biggest media company in the world. The latter will be joining the likes of Amazon and Hulu in offering its own rival streaming service as of 2019.
Netflix market cap vs Disney vs Comcast
Source: The Motley Fool/Y charts
Stock rose even higher in the following months, with a high of $423.21 in June, taking Netflix’s market cap as high as $185.6 billion. By October levels had fallen back to just below $300, setting the Netflix market cap at $130.75 billion.
Netflix Funding Rounds
Before its IPO, Netflix went through six funding rounds between October 1997 and April 2000, raising between $250,000 and $50 million – modest looking figures given Netflix’s rapid growth since.
Netflix profitability
Netflix operates at a profit. In Q3 2018, gross profit was $1.6 billion, and Netflix’s net income was $403 million.
Net income for the whole year in 2017 was $558.9 million – up considerably on the $186.7 million posted in 2016.
Netflix net income, Q1 2014-Q3 2018, millions of USD
Netflix debt
Netflix’s strategy of focusing on original content doesn’t come cheap.
Netflix announced in October 2018 that in planned to raise $2 billion through debt securities to invest into original programming. According to Variety, Netflix had reported $8.3 billion in long-term term debt in late September – up 71% on a year previously. The latest $2 billion will be the sixth time in less than four years that Netflix will be turning to bonds to raise $1 billion or more. The last one before this was in April 2018.
While the announcement had a negative impact on share price, Moody’s outlook for Netflix remain ‘stable’.
Netflix also reportedly $18.6 billion in off-balance sheet content spending obligations – with $10.2 due in “one year or beyond”.
Netflix costs
Netflix costs have been unsurprisingly climbing, year-on-year. Sales and marketing accounts for the highest proportion of costs, followed by R&D, and then general and administrative expenses. Between 2014 and 2017, costs more than doubled. While it remains the smallest area of expense, general and administrative costs have increased by the higher proportion.
Netflix costs by area, 2014-2017, millions
Final thoughts
It’s a truism to say that Netflix has changed the way we watch television and film forever. That doesn’t make what it’s done any less significant, though. It may well seem utterly bizarre to the viewers of the future that we would ever be at the mercy of anything as backward as television schedules, or physical media.
Its first mover advantage has served it well, and it continues to dominate the space. Given that its chief rival is Amazon, that’s no mean feat. There’s no denying, however, that the marketplace is growing increasingly crowded, with niche services rising up alongside larger enterprises that target the mainstream.
It is perhaps in response to this that Netflix has moved so assertively to reposition itself as a creator as well as a distributor of content. The tactic seems to be working for now, but it remains to be seen whether it can prosper in the long run – something that entirely hinges on the quality of its output.
For now, however – in the wake of its international push – Netflix continues to enjoy an exalted position as the name most synonymous with streaming content all over the world.
