Netflix Q4 earnings: 20 million subscribers; revenue of $596 million

Netflix today announced it had added 3.08 million subscribers in the fourth quarter, a 166 percent year-over-year change, to take its total to 20.01 million. The company, in a letter to shareholders posted to its website, also said revenues for the quarter were $596 million, up 34 percent from a year ago, with net income of $47 million, or 87 cents per share, both were up more than 50 percent from a year ago.

Netflix in 2010 added some 7.7 million subscribers, twice what it had expected, and a number it said "underscores the momentum of the business." And, it said, its streaming video option, which it introduced in November, has accounted for more than one third of new additions, a number the company expects to grow.

The company said DVD shipments in the quarter grew only marginally, adding that they expect them to erode over time as more subscribers use the streaming service exclusively.

Netflix also said its foray into Canada, where it launched its first international test late last year with a streaming-only  service, has seen "excellent" results and acknowledged it would expand into a second global market in 2011.

"We are significantly increasing our available content in Canada, and expect to be profitable on a run-rate basis in Q3 of this year," it said. "Assuming that Canada continues to perform well for us, we will expand into an additional market in the second half of this year."

If, it said, the second market looks to be profitable within eight quarters, it would "continue to expand and invest aggressively in 2012 around the globe."

Netflix said it will begin breaking out international financials in coming quarters.

In somewhat of a surprise, Netflix said the actual viewing hours of Netflix on Apple Tv has surpassed that of the iPad.

Across the board, it said, "Our partners are finding that Netflix is their most popular service for Internet video viewing, and they are seeking ways to make their products easier to use."

In a bow to content owners, Netflix said it would seek to bring entire seasons of shows to its library rather than day-after or days-after they air.

"This is in the best interest of content owners and is consistent with our desire to offer a very low-cost service for consumers," it said. "As with theatrical ticket sales, VOD and the 28-day DVD sale window, this allows studios to capture the market for those most interested in seeing content right away. You will occasionally see us offering shows day after broadcast, as we do with "Saturday Night Live," or 15 days after broadcast, as we do with Disney Channel programs, but it doesn't represent a change in our overall TV strategy."

Despite a sometime-difficult relationship with Time Warner, Netflix acknowledged that its relationship with Starz, a TW division, is one of its "most important deals," adding that it would be working with Starz to "explore renewal options."

For more:
- see this release
- see the Netflix website

Related articles:
Netflix forecast: 23.7 million subscribers by end of 1Q2011; revenues to $717 million
Netflix: Threats to business include TV Everywhere, content costs, net neutrality
Netflix: More viewing hours for Apple TV than iPad; Web TV a 'big growth category'

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