x
OTT

Netflix Aces Q4

Everything's coming up roses for Netflix.

On the heels of announcing global expansion to more than 130 new countries, Netflix Inc. (Nasdaq: NFLX) released its quarterly earnings report late Tuesday with better-than-expected subscriber growth and solid revenue increases across domestic and international markets. The company now claims more than 75 million customers and believes it will add another 6 million in the first quarter of 2016. Total revenue for last quarter added up to $1.82 billion, narrowly missing the Wall Street consensus estimate of $1.83 billion. However, Netflix posted earnings of $.10 per share, well above Wall Street estimates of $.02 per share.

The major takeaways from the Netflix quarter are that increased spending on original content appears to be working, and that global expansion can continue to drive overall growth even as it becomes more difficult to add new subscribers in the US.

Netflix CEO Reed Hastings emphasized the importance of original programming, saying that the "positives that have come from original spending have been tremendous." He also reiterated a stat from his keynote presentation at CES, noting that Netflix plans to release more than 600 hours of original programming in 2016, up from about 450 hours last year.

At the same time, Hastings was careful not to knock the business of licensing content from other providers. He also tempered his response to broadcasters' threats that they would hold more content back from licensing deals in the future.

"It's still a very competitive business," said Hastings, pointing out that content will always go to the highest bidder. He argued that if that highest bidder is his company, then Netflix will continue to secure new content rights.

As Hastings has said before, the challenge of moving in to China -- one of the few countries where Netflix doesn't operate today -- will continue to be a difficult one. However, that still leaves plenty of opportunity for new international business, and it still positions Netflix as a content company with what appears to be the largest international footprint. (See What's Next for Netflix .)

That nearly global base of Netflix's operations has massive implications for the rest of the pay-TV market. Even though Netflix can't offer the breadth of content that other pay-TV providers can (and, by the way, it's closing that gap with original programming), the company is now setting expectations for what the TV experience should look like around the world. That influence will likely shape the efforts of other video service providers for years to come. (See Netflix: The Birth of a Global TV Network.)


Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.


In other tidbits from the Netflix earnings call, the company referenced its continuing efforts to improve video encoding and enforce geographical boundaries to accommodate content rights agreements. Hastings also praised T-Mobile US Inc. 's Binge On service, which gives subscribers the ability to stream an unlimited amount of video without worrying about data usage caps. Binge On has come under criticism of late because it reduces the quality of all video streams when the feature is turned on. Hastings, however, said he thinks the service is a great new option for consumers.

Finally, Hastings ended the earnings call with an unsolicited testimonial for Charter Communications Inc. 's proposed acquisition of Time Warner Cable Inc. (NYSE: TWC). "I think it would be a tremendous positive," declared Hastings. He cited Charter's promise to extend its policy of offering settlement-free peering to its expanded footprint as the primary reason why Netflix favors the deal.

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

WhoCares 1/20/2016 | 5:03:39 PM
NetFlix... THe thing will be this.....

More & more Co's will start there own online deals.....

Then NetFlix may hit a road block?
Ariella 1/20/2016 | 10:11:14 AM
Netflix It's doing very well, Reuters reported that its stock rose 7 percent to $115.42 in after-hours trading.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE