Netflix is a very popular streaming service company that offers subscription-based streaming services to its users. So, it’s quite clear that Netflix makes most of its profit from subscription fees. Another source of incomee for Netflix is sponsorship money, investments, copyright sales, and many more. Moreover, Netflix also generates revenue from DVD rentals service in the USA but over the last few years’ revenues from this service have declined.
Company Overview: Netflix
Founded on August 29, 1997, by Reed Hastings, and Marc Randolph, Netflix Inc. is American based world’s number one streaming service provider. It offers subscription-based video streaming services in more than 190 countries around the world excluding China, Crimea, North Korea, and Syria. Netflix has a huge content category and it has its own productions named Netflix Originals. Netflix also offers various movies, serials, etc. through distribution deals. You will be amazed to know that Netflix has more than 221.6 million subscribers worldwide. The below table will give you an idea about the Netflix subscribers worldwide –
| The United States and Canada | 74.6 million |
| Europe, the Middle East, and Africa | 74.0 million |
| Latin America | 39.9 million |
| Asia-Pacific | 32.7 million |
Since its establishment, Netflix has been playing a very important role in independent film distribution. The best part of Netflix is it supports a huge number of platforms like a computer, smart TVs, set-top boxes, tablet computers, smartphones, digital media players, video game consoles, virtual reality headsets, and many more. In Q1 of 2022, Netflix generated more than 7.87 billion U.S. dollars and it has surpassed the total revenue of 7.16 billion in the corresponding quarter of 2021.
Netflix Quarterly Revenue (2009 – 2022)
| Netflix Quarterly Revenue | Millions of US $ |
| 2022-03-31 2021-12-31 2021-09-30 2021-06-30 2021-03-31 2020-12-31 2020-09-30 2020-06-30 2020-03-31 2019-12-31 2019-09-30 2019-06-30 2019-03-31 2018-12-31 2018-09-30 2018-06-30 2018-03-31 2017-12-31 2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30 2015-06-30 2015-03-31 2014-12-31 2014-09-30 2014-06-30 2014-03-31 2013-12-31 2013-09-30 2013-06-30 2013-03-31 2012-12-31 2012-09-30 2012-06-30 2012-03-31 2011-12-31 2011-09-30 2011-06-30 2011-03-31 2010-12-31 2010-09-30 2010-06-30 2010-03-31 2009-12-31 2009-09-30 2009-06-30 2009-03-31 | $7,868 $7,709 $7,483 $7,342 $7,163 $6,644 $6,436 $6,148 $5,768 $5,467 $5,245 $4,923 $4,521 $4,187 $3,999 $3,907 $3,701 $3,286 $2,985 $2,785 $2,637 $2,478 $2,290 $2,105 $1,958 $1,823 $1,738 $1,645 $1,573 $1,485 $1,409 $1,340 $1,270 $1,175 $1,106 $1,069 $1,024 $945 $905 $889 $870 $876 $822 $789 $719 $596 $553 $520 $494 $445 $423 $409 $394 |
Company Profile of Netflix
| Company name | Netflix, Inc. |
| Type of business | Public |
| Type of site | OTT streaming platform |
| Headquarters | Los Gatos, California, U.S. |
| Industry | Technology & Entertainment industry, mass media |
| Services | Film production, Film distribution, Television production, Television distribution, etc. |
| Employees | 12,135 |
| Website | http://netflix.com/ |
List of Countries where Netflix is Available
| Afghanistan Albania Algeria American Samoa Andorra Angola Anguilla Antigua and Barbuda Argentina Armenia Aruba Australia Australian Antarctica Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin (Dahomey) Bermuda Bhutan Bolivia Bonaire, Sint Eustatius and Saba Bosnia and Herzegovina Botswana Brazil British Guyana British Indian Ocean Territory The British Virgin Islands Brunei Darussalam Bulgaria Burkina Faso (Upper Volta) Burundi Cambodia (Kampuchea) Cameroon Canada Cape Verde Islands (Cabo Verde) Cayman Islands The central African Republic Chad Chile Christmas Island Cocos (Keeling) | Islands Colombia Comoros Cook Islands Costa Rica Croatia Cuba Curaçao Cyprus Czech Republic Democratic Republic of Congo Denmark Djibouti Republic the Dominica Dominican Republic East Timor (Timor-Leste) Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Falkland Islands Faroe Islands Fijian Islands Finland France French Guiana French Polynesia Gabon Gambia Georgia Germany Ghana Gibraltar Greece Greenland Grenada Guadeloupe Guam Guatemala Guernsey Guinea Guinea-Bissau Haiti Heard Island and McDonald Islands Honduras Hong Kong Hungary Iceland India | Namibia Nauru Nepal Indonesia Iran Iraq Ireland Isle Of Man Israel Italy Ivory Coast Jamaica Japan Jersey Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyzstan Lao People’s Democratic Republic Latvia Lebanon Lesotho Liberia Libya Liechtenstein Lithuania Luxembourg Macao Macedonia Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Martinique Mauritania Mauritius Mayotte Mexico Micronesia Moldova Monaco Mongolia Montenegro Montserrat Morocco Mozambique Myanmar (Burma) | Netherlands Netherlands Antilles New Caledonia New Zealand Nicaragua Niger Nigeria Niue Norfolk Island Northern Mariana Islands Norway Oman Pakistan Palau Palestine Taiwan Tajikistan Tanzania Thailand Togo Tokelau Islands Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Turks And Caicos Islands Tuvalu U.S. Virgin Islands Uganda Ukraine United Arab Emirates United Kingdom (Great Britain) United States Uruguay Uzbekistan Vanuatu (New Hebrides) Vatican City (Holy See) Venezuela Vietnam Wallis and Futuna Western Sahara Yemen Zambia Zimbabwe |
Business Model of Netflix: How Netflix Makes Money
Netflix’s business model consists of subscription-based on-demand service and DVD rental service by mail. Though many of us know Netflix as a popular streaming service provider but it was not Netflix’s first source of income. Netflix is a more than 25 years old company and its first service was a DVD rental service by mail and at that time it was its first source of income. With the advancement in technology, Netflix followed the trend and introduced the streaming service. Now with times, Netflix’s main source of income is the subscription-based streaming service.
1. Subscription Fees
Currently, the prime source of income for Netflix is its membership plans. If you want to use the Netflix streaming service then you have to buy a subscription plan from Netflix. Netflix has 4 types of membership plans and the fees range from $3.99 to $11.99. The below table will give you a clear idea about Netflix’s subscription plans and pricing –
| Description | Plans and Pricing | |||
| Mobile | Basic | Standard | Premium | |
| Monthly cost | $3.99 | $7.99 | $9.99 | $11.99 |
| Number of screens you can watch on at the same time | 1 | 1 | 2 | 4 |
| Number of phones or tablets you can download on | 1 | 1 | 2 | 4 |
| Unlimited movies, TV shows, and mobile games | Yes | Yes | Yes | Yes |
| Watch on your mobile phone and tablet | Yes | Yes | Yes | Yes |
| Watch on your laptop and TV | Yes | Yes | Yes | |
| HD available | Yes | Yes | ||
| Ultra HD available | Yes |
Netflix has generated more than $11 billion in revenue from the subscription fees in 2021. Below are the Netflix annual subscribers from 2011 to 2021 –
| Year | Subscribers (mm) |
| 2011 | 21.50 |
| 2012 | 25.71 |
| 2013 | 35.63 |
| 2014 | 47.99 |
| 2015 | 62.71 |
| 2016 | 79.90 |
| 2017 | 99.04 |
| 2018 | 124.35 |
| 2019 | 151.56 |
| 2020 | 192.95 |
| 2021 | 209.03 |
Netflix Revenue from Subscription Plans
| Year | Amount (mm) |
| 2017 | 933.94 |
| 2018 | 1282.04 |
| 2019 | 1639.87 |
| 2020 | 2105.08 |
| 2021 | 2270.06 |
2. DVD Rentals
When Netflix started its journey, DVD rental was its main source of income. Since 1998, Netflix has sent more than 5 billion DVDs to customers in the USA. Still, now Netflix offers DVD rental service by mail to USA customers and makes money. However, with all the latest technologies, the sales and revenues from DVD rental services are declining every year. There are two types of monthly plans available for DVD rental service. They are –
- Standard DVD plan: $7.99 per month
- Premier DVD plan: $11.99 per month
The standard DVD plan allows the customer to order one disc at a time and an unlimited number of discs per month. On the other hand, the Premier DVD plan allows the customer to order two discs at a time and an unlimited number of discs per month.
Netflix DVD Rental Service Revenue by Quarter (2012 – 2021)
| Category | Total Revenue ($) |
| Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 | 319.70 million 291.49 million 271.32 million 254.37 million 243.29 million 232.38 million 221.87 million 213.26 million 204.35 million 194.72 million 186.60 million 179.49 million 173.20 million 164.02 million 157.52 million 151.00 million 144.75 million 138.73 million 132.38 million 126.41 million 120.39 million 114.74 million 110.21 million 105.15 million 98.75 million 92.90 million 88.78 million 85.16 million 80.69 million 76.20 million 71.88 million 68.45 million 64.33 million 61.57 million 58.83 million 54.65 million 49.58 million 46.29 million 44.23 million |
According to the above tables, there is a 19% decline in the revenue of DVD rental services from 2019 to 2021.
FAQs about How Do Netflix Movies Make Money
How many employees work on Netflix?
According to the LinkedIn profile data, Netflix has more than 15,200 full-time employees.
What is the most-streamed TV show on Netflix?
The Office is the most streamed TV show on Netflix. The TV show has a total of 57.1 billion watch minutes!
What is Netflix’s business model?
Netflix has a subscription-based business model. Netflix has four types of subscription plans to choose from. You have to buy any of the available subscription plans to enjoy the streaming service from Netflix. When you subscribe to a Netflix membership plan, you will get access to a huge collection of movies, series, shows, etc.
What are the most-watched TV shows on Netflix?
Below is a list of the 10 most-watched TV shows on Netflix –
| Name | Number of Hours Viewed |
| Bridgerton: Season 1 | 625.5 million hours |
| Stranger Things 3 | 582.1 million hours |
| The Witcher: Season 1 | 541.0 million hours |
| 13 Reasons Why: Season 2 | 496.1 million hours |
| 13 Reasons Why: Season 1 | 475.6 million hours |
| Maid | 469.1 million hours |
| You: Season 3 | 467.8 million hours |
| You: Season 2 | 457.4 million hours |
| Stranger Things 2 | 427.4 million hours |
| Sex Education: Season 3 | 418.8 million hours |
References:
https://netflixlife.com/2020/10/30/how-do-netflix-movies-make-money/
https://www.investopedia.com/insights/how-netflix-makes-money/
Last Updated on November 20, 2022 by Ana S. Sutterfield
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
