In the second quarter, Netflix reported lower-than-expected subscriber growth and took a share price hit almost immediately, as investors worried about the company's strategy and future.
But now, after a strong third-quarter earnings report, investor concerns took a back seat as it became evident that the company's 'original content' strategy was finally paying off.
The main concern for the company in Q2 was related to subscriber growth, which grew by only 5.15 million -- missing its own estimate of 6.2 million. But in Q3, this it was adequately addressed as the company added nearly 7.0 million subscribers against an estimate of 5.0 million.
Focusing on original content proved beneficial for Netflix, as it’s expected to help the company save big on licensing costs over the long term. Furthermore, when all of these original-content owned shows and movies are paired with higher subscriber income with lower costs, the company is expected to become more profitable. Also, when it has a host of premier shows along with a sea of second-tier original shows, the company is positioned to cater to the needs of a wide range of subscribers across the globe at an optimum cost.