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The above represents the Netflix total marketing expenses by year, starting from the fiscal 2004 to the recently completed fiscal year. During the fiscal 2019, the OTT player has spent nearly 13.2% of its total annual revenue on marketing activities. Netflix marketing expenses increased 11.9% year-over-year in 2019, to an all-time high $2,652.46 million. Over 33% of that company poured into marketing during the fourth quarter of 2019.
Growth in Netflix Marketing Spending: History
|Source||Netflix Annual Reports, SEC Filings|
|Note||Netflix fiscal year starts from January 1st|
The total marketing expenses of Netflix consist of advertising expenses, as well as the payments made to the company’s affiliates and consumer electronics partners.
The video streaming giant has increased its annual spending on marketing activities over the last 15 years. In just two years, Netflix doubled its marketing spending, from just $100.5 million in 2004 to over $225.4 million in 2006.
In 2014, Netflix marketing expenditure surpassed $500 million for the first time since the company was founded. The total marketing expenses amounted to $607.2 million in 2014, with 29.2% YoY growth. Out of those, approximately $533.1 million were spent on content advertising.
Interestingly, in FY 2016, the video-on-demand company increased their marketing spending to a whopping $1 billion. The company recorded a significant 33.2% YoY growth in its marketing expenditure, from $824 million in 2015 to $1,097.5 million in 2016.
The highest-ever growth in Netflix marketing spending recorded in FY 2018; the total expenses increased 64.97% YoY during 12-months ended December 31, 2018, to $2,369.5 million.
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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