& cplSiteName &

Netflix Lands in Nearly Half of US Households

Mari Silbey
1/19/2017
50%
50%

Marking ten years in the streaming video business, Netflix catapulted past analyst expectations with its earnings report for the fourth quarter. Not only did the company exceed revenue forecasts, but it continued to add a significant number of subscribers both nationally and internationally, reaching nearly 50 million US subscribers, or almost half of US households, and 93.8 million subscribers in total.

Netflix Inc. (Nasdaq: NFLX) took in $2.48 billion in revenue in Q4 and posted earnings per share of $0.15. Analysts had pegged revenues at $2.47 billion, with an EPS number of $0.13 or $0.14. The streaming giant also generated a net income of $67 million compared to its own forecast for the quarter of $56 million. (See Netflix Soars, Says No Near-Term Price Hike.)

Equally important, Netflix posted customer additions well above what it had predicted for the quarter. It added a total of 7.05 million subscribers in Q4 -- compared to a forecast of 5.2 million -- with 1.93 million coming from the US, and the other 5.12 million coming from international markets.

In after-hours trading, Netflix's stock price reached an all-time high as it soared to $146, up from $133.26 when the market closed at 4 p.m.

Significantly, Netflix is still operating a loss internationally, but the company now says it expects a slight profit from global operations in Q1. Since it then plans to plow profits back into the international business, Netflix expects to return to negative territory there in Q2. However, the company is advising that operating margins overall will rise with continued global expansion, and that it's targeting a margin of 7% in 2017, up from 4% over the past two years.


Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.


There was one note of caution from Netflix CEO Reed Hastings as he responded to a question on how his company competes with cable.

"In terms of getting to a full one-to-one tie ratio with today's cable," said Hastings, referring to the cable industry's penetration of US households, "that includes a lot of sports, which we don't have plans for."

However, Hastings has remained consistently bullish on the prospects for Internet video as a whole. And while Netflix may never be a leader in live TV, Hastings sees viewers moving en masse in the direction of binge viewing for most video content anyway.

In a letter to investors, Netflix's leadership team pointed out that "the BBC has become the first major linear network to announce plans to go binge-first with new seasons, favoring internet over linear viewers. We presume HBO is not far behind the BBC. In short, it's becoming an internet TV world, which presents both challenges and opportunities for Netflix as we strive to earn screen time."

Among other issues addressed in the Netflix earnings report, executives gave a nod to the incoming Trump administration, stating that if Republicans repeal net neutrality it shouldn't have an adverse effect on the company's business because Netflix has grown to a formidable size. That said, Netflix still supports the law with the argument that "strong net neutrality is important to support innovation and smaller firms."

Briefly, in both the Netflix investor letter and in public statements, Hastings also talked about product and partnership announcements during the fourth quarter. In particular, Hastings mentioned the successful integration with Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s X1 platform, while suggesting that the additional distribution isn't the primary reason Netflix had such a positive Q4. "It wasn't just a Comcast story," he said. (See Comcast Binges on Netflix in New Beta.)

Referencing Netflix's launch of a new downloadable option for content, Hastings observed that the feature is "creating a big wave of customer joy." Netflix was initially lukewarm on the idea of a download-to-go function, then purported to be open to the notion, and finally launched the new feature in November. (See Netflix Queues Up Video Downloads.)

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

(6)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
1/30/2017 | 9:32:20 AM
Re: Profit plow
Yep, the numbers they provide do give a nice slant to the company. But, I do wonder if it's prudent to invest $146 to buy a share of stock and get back a dividend of 14 cents? That seems to indicate to me that folks are gambling on stock prices increasing more than return on company profits.
Michelle
50%
50%
Michelle,
User Rank: Light Sabre
1/21/2017 | 1:18:50 PM
Re: DVD service
@Kelsey I have wondered the same. We were on the 2-DVD + streaming plan. We downsized to the lowest DVD plan (+ streaming) because we weren't taking advantage of DVDs. We watch more discs now, than in all the previous years we were subscribers. I wonder what everyone else does...
Kelsey Ziser
50%
50%
Kelsey Ziser,
User Rank: Blogger
1/19/2017 | 4:34:38 PM
Re: DVD service
@Mari - Thanks for answering my question! I figured it would be low and that most subscribers would be interested in streaming only.
msilbey
50%
50%
msilbey,
User Rank: Blogger
1/19/2017 | 4:24:03 PM
Re: DVD service
The DVD business is a teeny tiny part of revenue now, about $1.3 million out of $2.48 billion.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/19/2017 | 2:28:38 PM
Profit plow
Mari -- There's not much in the way of profit to "plow into" expansion and development. But I do give Netflix a lot of credit for using numbers to cast itself in a very positive light.
Kelsey Ziser
50%
50%
Kelsey Ziser,
User Rank: Blogger
1/19/2017 | 10:07:34 AM
DVD service
I'm curious to know about the popularity of their different plans. Are most customers on the streaming plan only or is there still a lot of demand for the DVD delivery service? I opted just for streaming about a year ago b/c I wasn't watching the DVDs fast enough to justify the additional cost.
From The Founder
NFV's promises of automation and virtualization are intriguing, but what really excites service providers is the massive amount of money they could save.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
AT&T's Tech President Preps Workforce for the Future

7|26|17   |   5:47   |   (6) comments


AT&T is focused on the software-defined network of the future and is reskilling its workforce to get ready too, according to AT&T's President of Technology Development Melissa Arnoldi.
Women in Comms Introduction Videos
Cisco: Mentoring Critical to Attract & Retain Women

7|19|17   |   6:40   |   (1) comment


Liz Centoni, senior vice president and general manager of Cisco's Computing System Product Group, shares why mentoring in all its forms is important for women and what Cisco is doing that's made a difference for women in tech.
LRTV Custom TV
Gigabit LTE With Snapdragon 835

7|12|17   |     |   (1) comment


At an event in Wembley stadium, EE used its live network to demonstrate gigabit LTE using a Sony Xperia XZ Premium smartphone with a Qualcomm Snapdragon 835 chip.
LRTV Custom TV
Implementing Machine Intelligence With Guavus

7|12|17   |     |   (0) comments


Guavus unites big data and machine intelligence, enabling many of the the largest service providers in the world to save money and drive measureable revenue. Learn how applying Machine Intelligence substantially reduces operational costs and in many cases can eliminate subscriber impact, meaning a better subscriber experience and higher NPS.
LRTV Custom TV
Unlocking Customer Experience Insights With Machine Intelligence

7|12|17   |     |   (0) comments


When used to analyze operational data and to drive operational decisions, machine intelligence reduces the number of tasks which require human intervention. Guavus invested in Machine Intelligence early. Learn about the difference between Machine Learning and Machine Intelligence.
Women in Comms Introduction Videos
Verizon VP Talks Network, Career Planning

7|12|17   |   4:49   |   (0) comments


Heidi Hemmer, vice president of Technology, Strategy & Planning at Verizon, shares how bold bets and the future of tech define her career.
Telecom Innovators Video Showcase
Masergy's NFV Journey

7|11|17   |     |   (0) comments


Ray Watson, vice president of global technology at Masergy, discusses the advantages and challenges in entering the still-maturing NFV market for the past three years.
Telecom Innovators Video Showcase
Mavenir on RCS Cloud Platform & Multi-ID

7|10|17   |     |   (0) comments


Guillaume Le Mener, head of marketing and corporate development at Mavenir, discussed RCS and the recent launch of Multi-ID, which supports T-Mobile's DIGITS, the revolutionary new technology that breaks down the limitation of one number per phone and one phone per number.
LRTV Custom TV
ADTRAN Executive Outlines Trends in Next-Generation 10-Gigabit Cable Networks

7|10|17   |     |   (0) comments


Hossam Salib, VP of Cable and Wireless Strategy at ADTRAN, outlines key trends as MSOs begin to deploy next-generation Gigabit and 10-Gigabit cable networks. In the interview, Hossam outlines the advantages of a Fiber Deep architecture, FTTH options including EPON and RFoG, and the importance of SDN and NFV in building next-generation high-bandwidth cable networks.
LRTV Interviews
Global Capacity: Bandwidth Demand Driving Ethernet Growth

7|6|17   |   6:37   |   (0) comments


At Light Reading's Big Communications Event in Austin, Texas, Global Capacity's VP of Marketing Mary Stanhope talks about how the demand for bandwidth is changing the way service providers deliver broadband services.
LRTV Interviews
Colt's Services Chief on Digital Delivery

7|5|17   |   16:12   |   (0) comments


Rogier Bronsgeest, the chief customer experience officer (chief CEO!) at Colt, discusses the way in which the service provider interacts with its customers these days and his aggressive net promoter score (NPS) targets.
Women in Comms Introduction Videos
BT VP: Women Should Fill Security Talent Gap

7|5|17   |   6:00   |   (2) comments


By 2020 there will be six security jobs for every qualified worker, and Kate Kuehn, vice president of Security for BT in the Americas, says BT wants to encourage women to fill the shortage in jobs.
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
NFV, SDN, Big Data – It's All About Automation
Craig Matsumoto, Editor-in-Chief, Light Reading, 7/21/2017
AT&T's Tech President Preps Workforce for the Future
Kelsey Kusterer Ziser, Editor, 7/26/2017
The Hidden (Human) Cost of Automation
Steve Saunders, CEO and founder, Light Reading, 7/26/2017
BBC Head: We Must Reinvent Broadcasting for a New Generation
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 7/21/2017
What's a Little Throttling Between Friends?
Mari Silbey, Senior Editor, Cable/Video, 7/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.