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Netflix surpasses 25 million streaming subscribers in the US

Netflix surpasses 25 million streaming subscribers in the US

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Netflix just released its Q3 2012 earnings, and the big news is that Netflix now has 25.1 million streaming subscribers in the US, up from the 23.9 million users announced last quarter and the 21.5 million customers Netflix reported in Q3 2011. This more than offset the decline in domestic DVD subscribers, which dropped by 690,000 in this quarter. Internationally, Netflix streaming subscriptions reached 4.3 million, up significantly from the 1.5 million the company reported in Q3 2011. This all led to $8 million in net income and $905 million in revenue, up 10 percent from Q3 2011 and up from the $889 million in revenue last quarter.

Netflix also took a moment to discuss competitive threats to its streaming business, noting that HBO finally launched a direct-to-consumer service without a cable subscription in a portion of Europe and that "it will make strategic sense eventually for HBO to go direct-to-consumer in the U.S., and become more of a competitor to Netflix." Of course, Netflix has its own original content strategy underway that it'll need to compete with this eventual HBO offering — we'd expect Netflix to continue to make moves to beef up it original content as it looks to move from a pure content provider to a home for original programming. We'll be listening in to the Netflix investor conference call this afternoon and will update with any new information we hear.

Update: Netflix is holding its earnings Q&A call, and talked a little bit about Netflix originals, the company's recovery since raising prices last July, and the effect of the Summer Olympics on its business. Netflix specifically admitted that that it had a strong July, followed by a "soft" August, and a slow bounce-back in September. As for Netflix originals, the company said their value was derived from how much they'll be viewed relative to the cost of production, with some ancillary PR value from customer excitement. The company also hopes that eventually, it's original content will always provide a reason for customers to continue their subscriptions, even though Netflix is releasing an entire season at once rather than drawing it out week-by-week.

Netflix also said that it streamed "over three billion hours in Q3, which we feel great about, and it's continuing to grow." The company also noted that its viewing hours continue to rise despite the fact that it has more non-exclusive content than exclusive content. That said, it does want to move towards having more exclusive content to increase the service's value to consumers. As for pricing, when asked if Netflix needed to raise prices to grow average revenue per user, CEO Reed Hastings said that the company had no plans to change its current pricing structure — it hopes to grow revenue simply by expanding its customer base. The company also addressed last week's Amazon Web Services outage, saying that "AWS has done a great job for us" and noting that outages can be expected from time to time; fortunately for this outage, "our customers were not materially affected."