RSSCapitalizing on stay-at-homers, Netflix posts a 45% profit jump
By Jacqueline Emigh | Published January 27, 2009, 11:16 AM
"It's very clear that streaming is energizing our growth," said Netflix Chief Executive Reed Hastings, in announcing a 45% leap in quarterly profits for the online video rental service despite a declining overall economy.
With consumers relying more on home entertainment during the financial crunch, Netflix is taking obvious advantage of the trend, closing the fourth quarter with 9.39 million subscribers, up 26 percent from the same quarter the year before.
Netflix first began cashing in on video streaming in January of 2007, with the introduction of live streaming as an alternative to its DVD-by-mail rental service. Meanwhile, it has boosted demand for its streaming service by entering into pacts for devices from Samsung, LG, and Microsoft that let consumers "Watch Instantly" on TV, as opposed to the PC screen.
Strong sales of flat panel TVs, even in the recession, haven't exactly hurt the Netflix cause. Neither has the availability of high-definition content.
Only some of the titles in the Netflix video library are streaming-enabled. But during yesterday's conference call with financial analysts, Hastings said the company will "substantially" raise its investment in video streaming over the year ahead.
"We plan to spend as much money as we can with the studios, licensing as much content as we can. And we are already one of the studios' largest Internet revenue services," according to Hastings.
Also over the fourth quarter, the company's revenues stepped to $359.6 million from the previous level of $302.4 million. Meanwhile, the cost of acquiring new subscribers dropped to $26.67 per subscriber from $34.58.
In other customer garnering efforts, Netflix engages in promotions such as a deal with movie Web site Fandango offering consumers one free movie theater ticket in exchange for signing on for a one-month Netflix free trial.
Revenues shot to $359.6 million from $302.4 million. At the same time, the cost of acquiring new subscribers fell to $26.67 per subscriber from a previous level of $34.58.
Netflix is one of those rare things that seems to have no real shortcomings. They have a rock-solid business model and their constantly improving their services. I would personally choose having more titles overall than a greater number of them being in HD, but Netflix seems to be doing all it can on both fronts. My friend has it and we watch Netflix more than cable (and if not for his DVR we probably wouldn't even see broadcast TV). I also think the Fandango deal is brilliant..I hope it goes through, but they should make it so you get another free ticket after you rent a certain number of DVDs. I personally love seeing movies in a theater, but the cost is exorbitant now. Wouldn't it be wild if Netflix saved the silver screen?
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|We have been Netflix customers for years and have enjoyed the service greatly, but a couple of months ago we bought the compatible Roku streaming device and we are twice as hooked as we were before. In fact, we changed our subscription to the $9 one-dvd-at-a-time Netflix plan because we like the flexibility of watching the streaming content instead. In the past we would just not be in the mood to watch any of the Netflix dvd's that we happened to have, but now we just look through our Watch Instantly queue and there is always something that appeals to us. Although we only have 3 Mb DSL at present, we usually get very good video -- often HD quality. This service rocks and Netflix deserves the success they are enjoying.
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|Netflix is definitely headed in the right direction. If they can hold true and increase the amount of titles available significantly to watch instantly they might get me as a customer.
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|We have a family member who used to work for a local movie chain and, as a result, we were able to see most first-run movies for free very soon after their release. I cannot tell you how many times I walked out of one of those free screenings thinking to myself, "Man...am I glad that I did not have to pay to see that piece of drivel."
My wife has the three-movie plan from Netflix and can watch streaming movies on her computer, all for a monthly fee of a little under $20.00 She usually watches the movie (on disc) the day it arrives in the mail, returns it the next day, and then receives the next movie in her cue in about 36 hours. At that rate we easily watch between fifteen to twenty movies a month.
Sure...occasionally we'll go out for dinner and a movie, but the days of us running out to see every new "hot" movie are over; *especially* when the cost of two movie tickets exceeds our monthly Netflix fee (not to mention the added cost of dining out).
In fact, thinking about it now, I believe the last film I saw in the theater was "Dark Night".
If you are a movie buff...a real fan of film and its many genres...then Netflix is the best thing since DOS 6.22 ;-P
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