For Netflix, 100 million subscribers is just the beginning

Also, Adam Sandler is the savior of Netflix

There are very few companies that deserve to be cocky in an earnings report. Facebook and Google? Definitely. Apple? Almost always. Microsoft? Maybe not. 

You may not lump Netflix in with the big four of tech but, when you see the financial numbers of the company and hear its CEO Reed Hastings talk about its promising future, it’s hard not to put Netflix up there with tech’s biggest stars.

Netflix bolstered that claim with its first quarter fiscal results – you know, the thing that makes a lot of journalists’ eyes glaze over and die a little on the inside (this one included) – and while they are just as boring as you’d think, there’s one fact worth calling out: Netflix is about to hit 100 million subscribers. 

To put that number in perspective, that’s more than Hulu, Amazon Prime, Sling TV, HBO Now and all the rest combined. On their own it’s not even close.

But perhaps more important than that 100 million subscriber figure are the four smugly-written words that come after in the report: “It’s a good start.” Netflix, the company that earned $300 million dollars in the last three months and is about to claim its 100 millionth subscriber, basically just pulled a Kobe Bryant. It’s big now, but next year and every year after, it’s only going to be even bigger.

Around the world in 90 episodes

It’s OK to see that phrase and say, “Wow, Netflix is loaded up with some of the smuggest people on the planet.” And, you know what, that’s a totally acceptable assessment. But, before you write Netflix off as another company that drank the cool-aid, listen to Hastings answer questions about the future of the service from two analysts: 

(Warning: 99% of the video you’ll find below is boring. Unless you’re actually investing in the company you’re fine to skip ahead to about 9 minutes if you want the crux of why Netflix is about to become even bigger.) 

If you don’t have time to watch a 30-minute interview (it was a pretty slow day at the office for me, honestly) here are the main points. Netflix has more or less dominated North America, Latin America and Europe. It will keep growing in those areas but, according to Hastings, “Every 10 million subscribers is harder than the last” in these regions. 

Where Netflix has its sights set on, though, is Asia, the Middle East and Africa – three areas where the company “still hasn’t gotten it right”.

Considering that these regions have much higher populations than Europe, North America and Latin America, there’s reason to believe that Hastings is right – 100 million is just a drop in the bucket to the amount of people who would get excited about a regional equivalent of House of Cards or Orange is the New Black living around the world.

Netflix at the theater, and the rise of Adam Sandler

But other countries aren’t the only place to get new movies. You might catch your next favorite Netflix movie at the local cinema. 

Here’s an excerpt from the financial results: “Since our members are funding these films, they should be the first to see them. But we are also open to supporting the large theater chains, such as AMC and Regal in the US, if they want to offer our films, such as our upcoming Will Smith film Bright, in theatres simultaneous to Netflix. Let consumers choose.”

Netflix isn’t limiting itself to the small screen, naturally, and opening movies in theaters might provide the extra push people need to go home and sign up for the service after they finish with their popcorn. 

Despite what it sounds like so far, it’s not all sunshine, Adam Sandler and rainbows for the service – it has some major issues it needs to figure out. 

The biggest of these is something Netflix has been struggling with since its conception. It needs to pick the right movies and story ideas to “bet” on. Like obtaining the license to films, financing original movies is an expensive endeavor. When those shows and movies don’t perform, Netflix takes a hit.

So where did Netflix go wrong last year? According to the financial release, the main culprit was the sequel to Crouching Tiger, Hidden Dragon. 

“Some of our early movies have been successful by this measure, such as the Sandler movies and Siege of Jadotville. Others, such as Crouching Tiger Hidden Dragon: Sword of Destiny, have not.” Yikes, Adam Sandler movies performed better than Crouching Tiger, Hidden Dragon. 

“Just ahead of the release of our third film from Adam Sandler, Sandy Wexler, we announced the renewal of our deal with Sandler to premiere an additional four films exclusively on Netflix around the world. We continue to be excited by our Sandler relationship and our members continue to be thrilled with his films. Since the launch of The Ridiculous 6, Netflix members have spent more than half a billion hours enjoying the films of Adam Sandler.”

So for Netflix to get to its next 100 million, it needs to focus on new regions with localized content and continuing to make winning bets on the kind of content members want to see. Hey, if that means more Adam Sandler, there might not be anything we can do about it.