Developing original programming was a good gamble for Netflix (Nasdaq: NFLX) according to the company's first quarter earnings, which credited shows like "House of Cards" and "Arrested Development" for a subscriber growth spurt of 2.03 million customers and a subsequent share value surge of 24 percent.
The streaming services company posted a net income of $3 million in the first quarter versus a loss of $5 million a year ago, a story in USA Today said. But that was almost secondary to the addition of 2.03 million customers.
Much of this good news was thanks to original programming, starting with the company's biggest initial risk, the Kevin Spacey show "House of Cards."
"The global viewing and high level of engagement with the show increased our confidence in our ability to pick shows Netflix members will embrace," CEO Reed Hastings wrote in a letter to shareholders. "By dealing directly with the producers of TV shows, we are better positioned to pick just those shows that we believe will work best."
Even with all that, the number of new subscribers fell below the 2.05 million the streaming service provider added in the fourth quarter. Netflix now has a total of 36.3 million worldwide subscribers.
Wedbush Securities analyst Michael Pachter admitted that the numbers were nice, but questioned the exuberance that drove the stock up more than $42 from Monday's close to $217.15 on Tuesday morning.
"Everything they did was fine. But I question the market reaction. It's kind of ridiculous how much it's valuing this. There was nothing surprising about this," he told the publication.
Well, a little surprising. Analysts had expected Netflix to add about 1.8 million subscribers.
Domestically, Netflix's subscriber total of 29.17 million has now passed HBO's, which counts 28.7 million U.S. subs. Netflix could gain still more subs through a new plan that allows up to four simultaneous streams on an account (it currently only allows two) for an additional $4 per month than the current $7.99 model, Forbes said.
According to the Forbes story, Netflix "doesn't expect many users to opt for it--around one percent--but it is something that should be attractive to families or those who want to share an account amongst many friends, such as a shared housing situation."
For more:
- USA Today carried this story
- check out the Forbes story
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