Netflix Posts Surprising Q4 Profit, Attracts Connected-TV Owners - The UpStream

Netflix Posts Surprising Q4 Profit, Attracts Connected-TV Owners

posted Sunday Jan 27, 2013 by Nicholas DiMeo

Netflix Posts Surprising Q4 Profit, Attracts Connected-TV Owners

Netflix never ceases to impress us. The company has been rolling in a stream of success for a while now, even after upsetting its customers with a strange attempt at a brand split and price hike. In fact, over a third of the 800,000 customers that left because of the change came back in less than a year, proving Netflix' success with their offerings. This week, we're a little surprised to hear that the company has posted yet another profitable quarter, even after their problems this year, and remains one of the top dogs when it comes to connected TV owners.

Most recently, we learned that the PS3 was the number one player for Netflix streaming. Now we're also finding out, via NPD, that Q4 was another success for Netflix. NPD reports that about 40 percent of all the households that had an Internet-connected TV were streaming Netflix directly from that TV during the holiday quarter, with 21 percent jumping ship from over-the-top video services on the computer. More specifically, if we dive into the 18-24 demographic that number jumps beyond 50 percent, further proving that young adults are driving innovation and acceptance of these newer technologies. Staying with that demo, 25 percent stream Netflix from a laptop or PC, 16 percent stream from a tablet and 13 percent are using Netflix on their smartphones.

For more on Netflix, including the numbers from their very successful fourth quarter, join us after the break.

John Buffone, director of devices with NPD, had this to say about Netflix' staying power and attractiveness.

The inherent success of Netflix streaming can be attributed to its content library and TV centric strategy. The definition of a TV channel is changing. You no longer just tune to, say channel 27, to watch TV, pressing the Netflix button on the remote is just as easy.

Of course, the number of users actually subscribed to Netflix says a lot, however Wall Street seems to have an important say in the success of a company as well. In more good news, despite the market expecting a 13 cent-per-share loss for Netflix in Q4, CEO Reed Hastings announced this week a profit of $8 million, a 13 cent-per-share gain. In contrast, it pales in comparison to the $35 million in profit Netflix made during Q4 of 2011 but with all things considered, Netflix staying in the black for this year is no small feat and directly ties in to the sheer number of people buying tablets and TVs to use the video-streaming service. Related to that, Q4 revenue was up this year from last, jumping almost $50 million to $945 million and because of the good news, shares jumped $35.74 in after-hours trading on Wednesday night, bringing the stock to $139 a share. That's nowhere near the $300 a share Netflix was at in 2011 but again is still nothing to laugh at considering the fault the company made last year.

What's next for Netflix? Possibly a complete revival? We'll have to see but at least we know for now that Amazon Instant Video and even Redbox Instant are going to have a run for their money.


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