Is Netflix Eating the World?

Netflix just exceeded its quarter expectations, expanding its worldwide subscription to 125 million.

We are living in a time of increasingly powerful companies that often act more like empires than businesses. As we continue to debate what role Facebook should have in our global, another one of the so-called FAANG megacompanies is moving full steam ahead. If Facebook is eating the world, then, increasingly, so is Netflix—though, thus far, it’s doing so in a much more palatable way.

Netflix is growing at a rate even faster than it projected it would. According to THR, Netflix added 7.4 million new customers to its streaming subscription service in the first quarter, exceeding its own projections. The company had previously projected growth of 6.35 million subscribers, so that… is a lot more. This increases its total subscriber base to 125 million people globally (which is still much lower than Facebook’s more than one billion active users).

Where are these millions of subscribers coming from? That would mostly be international markets. Out of the 7.4 million new subscribers, 5.46 were outside of the U.S. These numbers translated to $3.7 billion in revenue for the company. The streaming service provider now operates in over 190 countries.

As Netflix continues to expand, it also continues to change the way it does business. It’s only been five years since Netflix began making its own content, but it now has its own production house, Netflix Studios, which means it doesn’t have to partner with outside studios to make original content. Netflix plans on spending $8 billion on original content in 2018. 

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Recently, the company made news when it decided to pull its movies from the prestigious Cannes International Film Festival because its films, which aren’t released in French cinemas, could not compete for the top prize. Netflix is, increasingly, forging its own cinematic path forward… and it has the power to not only pull it off, but change the whole system in the process. Thus far, this hasn’t resulted in any kind of monopoly or the changing of the system to the exclusion of important competitors.

However, the thing about capitalism is that, while it is a system that depends on infinite growth (maybe), there is a finite amount of business to secure—in Netflix’s case, there is a finite number of people to convert to its business model. At some point, Netflix is going to run out of people to add to its subscriber base, which will mean changing its business model in some way. That could mean upping the price of its subscription or it could mean a structural change, as it previously pulled off when it made the jump from a mail-away DVD subscription service to a mostly online streaming service, and then later from solely a distributor to also a content creator.

While Facebook has apparently partially “solved” its growth problem by selling users’ personal data, Netflix, which is also an insatiable data-gathering machine, has gone in the opposite direction. Netflix is a famously private company when it comes to its own data and algorithms. In other words, unlike Facebook (apparently), it behooves Netflix to keep its massive amount of user data in house. At least for now. This has spared Netflix from the kind of tech megacompany backlash that has begun to have tangible effects on Facebook’s bottom line, while also plaguing companies like Google and Amazon in some way.

As Netflix grows larger, will this continue to be true? That remains to be seen.