Davis Freeberg, once again, has the best coverage of Netflix' (NYSE: NFLX) recent quarterly and conference call:
Netflix reported strong Q4 2005 earnings today and continued to show impressive subscriber growth for their DVD by mail business. During the 4th quarter they increased their revenue to $195 million, generated $38.1 million in income, and finished the year with 4.2 million subscribers. They expect to have almost $1 billion in revenue for 2006 and are predicting that they will hit at least 5.95 million subscribers by the end of this year. They finished the year at the top of their guidance in subscriber numbers and the .57 cents per share they reported, easily topped analysts expectations of .15 cents a share. During the conference call following their announcement, they commented on HDTV, VOD and on managing growth.
In an earlier press release Netflix stated that they planned on offering both HD-DVD and Bluray to their subscriber base. In their conference call Netflix CEO Reed Hastings went on to add, "We will offer all HDTV titles the day they launch at no extra cost." When pressed for more details about the costs of HDTV DVDs during the Q&A session, Hastings commented that as far as the short term costs go, "we don't see any, it will be the same content cost as we're planning to spend so there is no impact in this year and probably for several years out."
Netflix is definitely firing on all fours right now, though the fear remains that the video space is incredibly dynamic and fast changing. There's still no meaningful competition, either. Read the whole thing for how the company is addressing those issues.
On related Netflix news, I recently came across this stat, that 70-80% of Netflix' releases are so-called "long tail". By that they mean, however, that they don't come from the new releases, but from the rest of the back catalog. Does this really count as "long tail" though? It seems like that whole crowd can basically call anything "long tail" just by moving the goalposts--"Anything outside of the top 20 is long tail". Not that this matters too much to Netflix, the business, but the "everything is long tail"-meme is slightly annoying, and should be questioned.
ummm...in a few years aren't people going to look back on recieving dvd's by mail as "quaint?"
Which is to say, netflix better have a strategy to compete with video on demand.
Posted by: Ian | January 25, 2006 at 11:55 AM