Netflix is growing quickly and strongly, with both revenue and subscriber numbers on the up as it evolves from a DVD-by-mail company first and foremost to a streaming company which just happens to offer DVDs as a sideline.
The revolution will be
Netflix is evolving at quite a rate now, taking its customers wishes on board and seeing the direction in which the video industry is heading.
The company started out as an alternative to the likes of Blockbuster, offering Video rentals-by-mail to those too lazy to walk to a store. But its ‘Watch Instantly’ streaming service is now outperforming the DVD side of things. So much so that it’s the core of Netflix’ business.
After building up its ‘Watch Instantly’ service by offering bags of content via a multitude of living room devices, Netflix is now heading towards the day when the rentals by mail side of its business will give way to streaming entirely.
Q3 Earnings Report
If you don’t believe me then take a look at the Q3 2010 earnings report for Netflix, as it shows this shift happening in an undeniable manner.
Netflix added 1.9 million subscribers during the last quarter, going from 15 million to 16.9 million. That’s a new record for the company, and means it has doubled the number of subscribers it has over the past two years.
Perhaps more importantly, two-thirds of Netflix subscribers now stream content, which represents an increase from 41 percent on a year ago, from 61 the quarter before. 50 percent of Netflix subscribers now stream more than half their content, using ‘Watch Instantly’ more than they use the DVD service.
Q3 revenue grew by around 31 percent, jumping to $553.2 million. This even exceeds Wall Street expectations. The company’s gross margin and share price is also rising.
That’s the present, but what about the future? It’s looking bright, that’s for sure, and it’s a future in which streaming is going to be king for the company.
Netflix CEO Reed Hastings used his commentary of the quarterly results to say, “By every measure, we are now primarily a streaming company that also offers DVD-by-mail.” Which says it all really.
I’m just waiting for the day when: 1. the U.S. gets a streaming-only option similar to Canada; 2. Netflix decides it’s worth its while going further afield and offers ‘Watch Instantly’ outside North America.
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