Netflix Earnings Report: Price Hike Fears As CEO States, “We Can Thrive On Streaming Only”

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Netflix LogoThe latest financials from Netflix suggest the company is flat-lining a little, especially with the recent price hikes affecting confidence. But its CEO Reed Hastings is confidently looking to the future, with the promise that Netflix can “thrive on streaming only.”

Netflix Earnings Report


has released its latest earnings report, which covers the second quarter of the 2011 financial year. The main points of the Q2 2011 earnings report are as follows:

Revenue of $788.6 million, with earnings at $1.26 per share. The first is slightly down on expectations, the second slightly up. Netflix now has 24.59 million subscribers in the U.S., and 1 million in Canada. This is just about in line with expectations. In Q3 Netflix estimates it will add another 2 million subscribers to that total, lower than expected due to the fallout from the recent price hikes.

Overall, analysts are disappointed, and investors even more so. Shares in the company initially dropped a whopping 7 percent after the figures were released. However, CEO Reed Hastings sees this as nothing more than a slight bump in the road, with the future still a rosy one.

Hastings Looks To The Future

Hastings is the man who makes the decisions at Netflix, and it is he that will have decided now is the time to split the DVD and streaming businesses into two separate entities. He may have very good reasons for having done so, but that hasn’t appeased current subscribers.

However, Hastings knows that this is the right strategy for the longterm, saying:

“The DVD can last a long time as a successful service if we give it a platform to succeed on. Having it as a division in Netflix, we can measure the profit and loss, and we think it’ll be a smart investment. We gained some confidence when we launched in Canada. That blew away our expectations. With the strength of streaming only internationally, we got convinced that we can thrive on streaming only.”

That does make sense. By splitting the two parts of the business Netflix can much more easily determine how great a demand there is for DVDs. And in the meantime its streaming-only option will grow in popularity both in the U.S. and internationally.


None of this, either the figures or the rosy future for the company, will make the slightest bit of difference to those subscribers facing a 60 percent price rise to continue enjoying both DVDs-by-mail and streaming options. But the company is clearly hoping these people will just disappear quietly over the next few months.

[Via AllThingsD]