It’s been a good couple of days for Netflix, Inc. (NASDAQ:NFLX) shareholders.
Netflix released earnings after the market closed on Monday, with results easily exceeding expectations. Investors are mainly focused on subscriber growth. The company had previously told analysts it expected to add 300,000 domestic subscribers and two million internationally.
Actual numbers came in at 370,000 new subscribers for the United States, and 3.2 million internationally, a huge beat. Investors responded by sending shares up approximately 20% on Tuesday. Shares continued rising during Wednesday’s trading, increasing more than 2%.
Netflix is also planning on really expanding its own in-house produced content. Other networks are becoming increasingly protective of their own content, which is increasing the price Netflix has to pay to carry popular shows and movies.
Management also believes the company can produce terrific programming because it isn’t beholden to advertisers. Many networks don’t want to show controversial content because advertisers may balk. Television networks have to deal with government regulations as well. They just can’t show what Netflix can.
Netflix released 600 hours of original content this year, planning to up that to 1,000 hours next year. It is aggressively hiring talented television talent from existing networks, much to the chagrin of traditional players. It plans to spend north of $6 billion on programming in 2017.
Investors are clearly thinking this focus on original content will further drive subscriber growth. We’ve entered a world where fewer people talk about the latest network shows, focusing instead on the latest new release from Netflix. That’s a good thing for the streaming service, and a bad thing for cable operators.
