Netflix left unscathed by price increase: 50.5m subscribers and US$1.34bn revenue

22 Jul 2014

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A recent price increase for Netflix has not damaged the streaming service’s bottom line as both membership and revenue are on the up.

Netflix ended its second quarter of 2014 with 50.5m subscribers in more than 40 countries worldwide, an increase from 37.56m at the same time last year. As its subscriber base continues to grow, particular gains have been seen in markets beyond the US.

Last quarter, 570,000 new subscribers came from Netflix’s domestic market, a decline from 630,000 in the second quarter of 2013. This brings total US membership to 36.24m.

In international markets, the company added 1.12m subscribers last quarter, compared to 610,000 in the same quarter last year. This amounts to 13.8m subscribers outside the US, representing 78pc year-on-year growth.

Netflix announced a price increase following its first-quarter earnings call in April and it seems its strategy of delaying this modest increase for existing subscribers succeeded in ensuring new customers weren’t deterred and existing customers didn’t drop off.

Netflix also attributed its strong user growth to its exclusive content. Original content from the streaming service is going strong, with shows such as Orange is the New Black and House of Cards receiving critical acclaim. Netflix original series and documentaries received 31 Emmy nominations in all, with Orange is the New Black chalking up more nominations than any other comedy series, 12.

US$1.34bn revenue as DVD decline steadies

In terms of revenue, Netflix ended its second quarter of 2014 with US$1.34bn and a net income of US$71m – more than double its US$29m net profit from the year-ago quarter.

Even Netflix’s DVD-rental-by-post service continues to generate revenue with 6.3m subscribers. Decline of this business seems to have steadied, too. In the second quarter of 2013, 475,000 members cancelled their subscriptions but this figure dropped to 391,000 in this year’s second quarter.

In September 2014, Netflix will launch in Germany, France, Austria, Switzerland, Belgium and Luxembourg – markets with more than 60m broadband households. A new initiative revealed through the earnings call will be the introduction of gift cards in the US, Canada, Mexico and Germany this autumn in an effort to capture consumers without access to credit cards.

Elaine Burke is managing editor of Siliconrepublic.com

editorial@siliconrepublic.com