The above graph represents the Netflix advertising expenses by year, starting from fiscal 2002 to the recently completed year. Netflix’s advertising expenses during FY 2019 hit an all-time high of $1,879 million, up from $1,808 million in FY 2018. The $71 million increase in advertising spending was primarily due to the increase in the number of global streaming memberships due to increased International presence, as well as the growing content production activities, including Netflix Originals.
The advertising expenses of Netflix include the promotional activities such as digital and television advertising.
Netflix Annual Ad Spending: History
|Source||Netflix Annual Reports, SEC Filings|
|Note||Netflix fiscal year starts from January 1st|
As the graph shows, the video streaming giant has significantly increased its advertising and marketing spending over the last few years, mainly to gain more eyeballs.
In 2005, the company spent nearly 19.9% of its total annual revenue on advertising activities. The total ad spend clocked over $135.9 million in 2005, with a strong 48% YoY growth.
In just 6 years, Netflix more than doubled its advertising budget. The total OTT ad spending in 2011 was $299.1 million, representing 40.8% YoY growth.
In 2014, Netflix advertising budget went up to $533.1 million, from $404 million in the previous year. That’s representing 31.96% YoY growth. Surprisingly, in just three years, the company has doubled its advertising expenditure as the number of global streaming subscribers also increased phenomenally. During 12 months ended December 31, 2017, Netflix poured over 1 billion on its content advertising across the world. The company reported an impressive 29.5% increase in its ad spend, from $842.4 million in 2016 to $1,091.1 million in 2017.
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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