Are you a Netflix user? Do you ever ask yourself “how much does Netflix mate?” We have the answer for you here and we will also tell you about Netflix, how it got started, the cost of running the company, its latest business model and more.
Netflix is a Pioneer in Video Streaming
If you think about streaming movies online then Netflix will usually be the first company that comes to mind. This is because it was a pioneer in this industry and basically defined how the streaming of movies and TV shows should be.
Netflix was one of the first video streaming companies to offer a monthly subscription model for customers to obtain their movie content. The name for this type of service is SVOD (subscription video on demand) and now many other businesses have followed suit and introduced a similar model such as:
All of these companies have learned from Netflix that there is a huge market for SVOD services.
How did Netflix get started?
Back in 1997, Netflix was a DVD rental company with a difference. Instead of visiting a store to choose your DVDs to hire everything was done by mail. A few years after they introduced this service, they saw that the DVD rental market was dying and decided to embark upon an online strategy for providing video content to their customers.
So, they decided that streaming video content was the way to go and became an innovator in the sector. Over the last few years, the online streaming service offered by Netflix has replaced their physical DVD delivery service.
In 2013 they decided to start producing their own shows. Some of these have done very well for the company such as “Orange is the New Black” and House of Cards”. Netflix has a current company valuation somewhere in the region of $140 billion. It has come a long way since the days of posting out DVDs to homes.
How much does Netflix make – The Current Netflix Business Model
Netflix decided very early on that they would build a huge list of paying subscribers. In 2020 they had over 180 million subscribers all paying between $8.99 and $15.99 every month. The numbers here are staggering. Now Netflix earns millions of dollars every quarter.
According to Statista.com, the first quarter of this year (2021) saw Netflix record revenues of more than $7 billion. In the same period of 2020, their quarterly revenue was $5.8 billion. The annual revenue earned by Netflix in 2020 was just short of $25 billion. For the last decade, Netflix has experienced excellent growth year on year.
At the current time, it is difficult for Netflix to acquire more paying subscribers in the United States so they have turned their attention to the global marketplace. Despite this, Netflix is still the king of SVOD. The bandwidth used by Netflix subscribers far outweighs that used by their competitors such as Hulu and Amazon.
What are the Operating Costs of Netflix?
If you are thinking that it must be very expensive to keep Netflix operating 24 hours a day then you would be right! There is more to take into account than the upkeep of the Netflix interface here. Netflix has not always made crazy profits. In 2018 it had to pay out more than $18 billion in fees to companies whose TV shows and movies they stream.
Nobody except the executives of Netflix knows what their true operating costs are but these are likely to be in the billions each year. The streaming video platform and interface are likely to be a fraction of the total costs. Most of the money that they pay out will be in royalties for the content that they are streaming to their customers.
Some of the competitors to Netflix generate additional income from running ads. Netflix has always avoided this but this may change in the future if they cannot find other ways to reduce their costs. They know that their subscribers do not want ads on the service. It is probably one of the main reasons that the customers choose Netflix in the first place.
It is Easy to provide Subscription Based Streaming Video Services now
When Netflix first started out, they had to figure all of the technical stuff out for themselves. These days, any business can provide a subscription based streaming video service and there are ready made software platforms out there to enable this. So, there you have it. You now know the answer to the question “how much does Netflix make?”