How Much Profit Is Netflix Generating From Its Domestic Subscribers?

-17.39%
Downside
607
Market
502
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Netflix

Back in 2013, Netflix‘s domestic streaming business generated $685 million in contribution profits, which are the profits after accounting for the cost of services and marketing expenses. For the next two years, the figure increased at an average annual rate of 46%, backed by an increase in the subscriber base, a rise in revenue per subscriber, and improvement in contribution margins. In order to gauge the effect of the last two factors in a better manner, it is worthwhile to record contribution profits generated per subscriber in a year.

In 2013, Netflix generated $20.50 from each subscriber, and the figure consistently increased to $32.56 in 2015. Going forward, we expect contribution profit per subscriber to reach $47 by the end of 2018, which reflects a compound annual growth rate (CAGR) of 18% for the period. Subscribers are becoming more lucrative for Netflix and its ability to increase subscription fees on the back of strong content is one of the main reasons behind this. Also, an improvement in contribution margins on account of reduced marketing expenses is providing some push.

netflix domestic streaming contribution margins

  • * in $billon
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netflix domestic streaming profit per subscriber

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