Netflix beats Q4 estimates, believes Amazon will soon compete

26 Jan 2012

Netflix experienced US$876m in revenues for the fourth quarter of 2011, an increase by 47pc from the same period during the previous year. It also believes Amazon will soon offer a standalone video-streaming service to compete with Netflix.

In its quarterly earnings report, the movie-streaming company saw its subscriptions rise in December thanks to strong seasonal additions, which helped it exceed its forecasts for the quarter. It saw fewer subscription cancellations and lower migrations to DVD-only plans in the US.

In total, Netflix had almost 22m domestic streaming subscriptions, which delivered US$52m in contribution profit. It had 11.17m domestic DVD subscriptions and 1.86m international subscriptions.

The company noted that competition could come from Amazon. This refers to recent reports that suggest Amazon will launch its own subscription video-streaming service. Netflix expects Amazon to brand its Prime video service as a standalone offering in the US with a lower price than Netflix. However, Netflix is unconcerned, believing it has more content to offer than Amazon.

It also mentioned the recent launch of Netflix in the UK and Ireland which happened earlier this month, saying it was experiencing faster membership growth than when it launched in Canada. Netflix said that as membership grows in the UK and Ireland, it will be able to invest in more content for the regions.

However, Netflix said the combined investments in quarter one of launching in Latin America, the UK and Ireland will see it lose money throughout 2012.