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The above graph represents the Netflix total marketing expenses by quarter, starting from fiscal Q1 2002 to the recently completed quarter. During the first quarter of 2020, the video streaming giant spent nearly 8.74% of its total quarterly revenue on marketing. Netflix’s total marketing expenses in Q1 2020 decreased a notable 18.3% YoY to $503.8 million. On a quarterly basis, it’s a massive 42.7% decline.
Growth in Netflix Marketing Spend: History
|Source||Netflix Quarterly Reports, SEC Filings|
|Note||Netflix fiscal year starts from January 1st|
As the graph shows, Netflix marketing expense are comparatively higher during fourth quarter than the first three quarters in any particular year. The OTT player took 3 years to double its marketing spending, increased from $55.6 million in Q4 2008 to $107.6 million in Q4 2011. The figure has further increased to $203.67 million in Q4 2014 and $730.36 million in Q4 2018.
Interestingly, in Q4 2019, the company spent a whopping $878.9 million on marketing activities – the highest-ever in its history! It is important to note that Netflix has prioritised International markets over its homegrown United States when it comes to marketing. The total International marketing expenses clocked $499.3 million in Q4 2019, while US marketing expenses was $379.6 million.
Netflix marketing expenses consist of advertising expenses and certain payments made to marketing partners, including consumer electronics (CE) manufacturers, multichannel video programming distributors (MVPDs), mobile operators and internet service providers (ISPs).
In Q1 2018, Netflix spent over half of a billion or $536.8 million on marketing and advertising, representing 75.3% YoY increase.
Note: Netflix has revised/reclassified some of the previous quarters figures.
About Netflix Inc.
Netflix Inc. (NASDAQ: NFLX) was founded on August 29, 1997, by Reed Hastings and Marc Randolph as a DVD-rental-by-mail firm. However, the company began its operations on April 14, 1998, by opening the world’s first online DVD rental store. For $19.95 a month, subscribers can rent as many DVDs as they want. The company slowly expanded its business by offering the streaming service in the US while retaining the DVD and Blu-ray rental service. In September 2010, the company began offering its streaming service to Canada, which later expanded to other international markets such as Latin America, the United Kingdom, Ireland, Australia, etc. Netflix is now available almost every corner of the world, except in mainland China (due to local restrictions), Syria, North Korea, and Crimea (due to US sanctions).
Netflix’s IPO (initial public offering) completed on May 29, 2002, selling 5.5 million shares of common stock at the price of $15.00 per share.
On January 22, 2018, Netflix’s market capitalization ballooned to $100 billion, becoming the largest digital media and entertainment company in the world.
Netflix is ranked #38 on the list of the World’s Most Valuable Brands by Forbes, with a brand value of $15.5 billion in 2019.
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