The above graph represents the Netflix annual marketing expenses by segment, starting from fiscal 2010 to the recently completed year. The total marketing expenses of Netflix increased 11.9% year-over-year in 2019, to an all-time high of $2,652.5 million. Approximately 59.9% of that spent on International marketing. While the rest 40.1% spent on streaming content marketing in the United States.
Netflix Marketing Expenses: History
|Source||Netflix Annual Reports, SEC Filings|
|Note||Netflix fiscal year starts from January 1st|
For the Netflix Domestic and International streaming segments, the marketing expenses consist of advertising expenses and the payments made to its affiliates and consumer electronics partners.
During the fiscal 2019, the company spent nearly 5.27% of its global revenue on streaming content marketing for Americans. The total Netflix domestic streaming marketing expenses hit an all-time high of $1,063 million in 2019, representing a modest 3.68% year-over-year growth.
In 2018, the OTT giant spent over $1 billion in its streaming content marketing activities in the United States. That’s more than twice as much as the company spent in 2016.
Between 2010 and 2019, Netflix poured only $0.85 million in its DVD marketing activities in the United States.
Netflix International marketing expenses surged 18.25%, from $1,344.1 million in 2018 to $1,589.4 million in 2019. The share of International marketing expenses has slowly increased over the last few years. During 12-months ended December 31, 2019, the company spent nearly 7.89% of its total global revenue in marketing activities outside the US.
Surprisingly, Netflix’s marketing expenses outside the United States increased from just $8.9 million in 2010 to a whooping $78.5 million in 2011 – representing an astonishing 780% YoY growth.
One must note that since 2014, Netflix has been spending more on International streaming marketing than domestic. In 2014, the video streaming giant spent nearly $607.2 million on marketing activities worldwide. Out of that, International marketing budget was $313.7 million, while US marketing budget was $293.5 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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