10 Surprising Facts Highlight Netflix, Inc.'s Wild 2016
With Netflix (NASDAQ: NFLX) sharing its final quarterly update for 2016 last week, it's a good time to go back and look at what the streaming-video giant accomplished during the year. After all, it was a wild 12 months for the stock. Shares pulled back as much as 25% in the middle of the year as investors questioned whether the company's growth prospects were eroding, and then investor optimism returned just as quickly in the second half of the year, when membership growth picked up again. After the stock's rebound, Netflix finished the year with almost a 13% gain, ahead of the S&P 500's 11% rise during the same period.
Here's an overview of the most surprising facts from Netflix's extremely volatile year.
Image source: Netflix.
Netflix expanded to 130 new countries. In a single month, Netflix went all out on its international expansion and expanded to 130 new countries. The January expansion positioned the company to learn quickly about how to please customers across a wide variety of markets.
Netflix added 19 million streaming members. Doubts about the company's ability to continue growing its streaming members were silenced as member growth surpassed 2015's additions of 17.4 million members. This puts total Netflix members at about 94 million -- a figure management indicates could be just the beginning.
Revenue growth accelerated. Thanks to continued growth in its streaming members and a successful price increase, Netflix's 2016 revenue increased 30% year over year, a rate that is up significantly from 23% growth in 2015.
Global streaming revenue was up 35%, highlighting the strength of the company's core business.
Netflix's DVD-by-mail serviceis still helping profits. Now accounting for just 6% of Netflix's total revenue, the company's domestic DVD-by-mail service's revenue continued to fade, falling 16% year over year. But the segment's contribution margin of $280 million is still important to the company's business, representing over 15% of Netflix's total contribution profit across all of its segments last year.
International streaming revenue soared 65%. The segment now accounts for 37% of total revenue, up from 29% of revenue in 2015.
Over 47% of Netflix's members are now outside the U.S., further emphasizing the growing importance of the streaming-video company's international markets.
Netflix finally launched offline viewing. In a departure from its streaming-only platform, Netflix began allowing customers to download some movies and shows for offline viewing. The move, Netflix said, was in response to customer feedback.
Image source: Netflix.
Netflix predicted HBO will soon join the binge-first, internet model. In its fourth-quarter shareholder letter, Netflix said networks are now beginning to favor internet viewers over linear viewers, moving to the binge-watching model of launching an entire season all at once on the internet -- a model Netflix pioneered. And HBO is next, Netflix boldly predicts:
Image source: Netflix.
Netflix launched over 600 hours of original programming. During 2016, Netflix found that its original content performed both domestically and internationally. This reinforced the company's commitment to originals, leading them to launch 600 hours of original programming, up from 450 hours in 2015. In 2017, Netflix plans to launch 1,000 hours of original content.
A rapidly evolving landscape in internet television is bound to make 2017 another interesting year for Netflix. But a few strong trends at the company will almost undoubtedly persist: rapidly growing streaming members as Netflix benefits from the secular transition away from linear TV to internet TV, rapid international growth as the company localizes its offerings in international markets, and tons of new original content aimed at retaining existing members and attracting millions more. Considering how significantly these trends have helped the company in the past, they'll likely continue to help Netflix strengthen its competitive position and grow its business in 2017.
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Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.