Netflix sees biggest sub increase since launch

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Netflix has reported its biggest increase in subscriber numbers since it launched 12 years ago, adding 9.6 million in the first quarter. Some 1.74 million new customers signed-up in the US and 7.86 million elsewhere – both above the average analyst estimates.

The streaming giant said the gains were better than expected and left them with a total of nearly 149 million subscribers. Chief executive Reed Hastings likened the past quarter to a “perfect clean shot” down the middle of a golf course’s fairway.

Netflix shares dipped 1 per cent in extended trading to $355.85 (€314.64) but in regular trading it closed up around 3 per cent or $359.46. Since it went public in 2002 Netflix’s shares have increased about 29,000 per cent. Revenues for the quarter topped $4.5 billion and the company reported a profit of $344 million.

In its results statement, Netflix took the time to acknowledge the imminent launch of big-player rival services, but suggested it wasn’t overly concerned by their arrival, though it is predicting lowered growth rates.

“Recently, Apple and Disney each unveiled their direct-to-consumer subscription video services. Both companies are world class consumer brands and we’re excited to compete; the clear beneficiaries will be content creators and consumers who will reap the rewards of many companies vying to provide a great video experience for audiences.” The statement read. “We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive ​and because of the differing nature of our content offerings​. We believe we’ll all continue to grow as we each invest more in content and improve our service and as consumers continue to migrate away from linear viewing.”

Meanwhile, Netflix has said it will soon commence testing weekly ‘Top 10’ lists of its most popular content – exclusively in the UK. The lists aim to make it easier for “those who want to watch what others are watching”. If successful, the lists will be rolled out globally at a later date.

Offering his thoughts on the quarterly results, tech, media & telco analyst Paolo Pescatore of PP Insights commented:

“[It was] another stellar quarter in terms of subscriber growth. This typically tends to be one of its strongest quarter. Whereas the coming two quarters tend to be quite challenging due to seasonality. No doubt the arrival of new OTT services will have an impact on subscribers.”

” [It is a] great time to increase prices given the strong quarter. Netflix is positioning itself as a traditional pay-TV with annual price rises in quest for revenue growth. However, the company must diversify into new services and business models for long term growth,” he concluded.

 

 


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