Something cataclysmic is happening at Netflix, and it could mean that online film rental really is poised for take off, at least the US. The detail came out of a Netflix announcement which told of subscriptions surging above 10 million with 600,000 net additions since January 1.
This is perhaps partly because Netflix has managed to aggressively lower prices over the past few quarters, with plans now starting as low as $4.99 a month, and $8.99 for the lowest plan which allows unlimited online viewing. Just two years ago Netflix was a $20 a month service, only tentatively lowering its pricing when Blockbuster finally came against it head to head.
Executives at Netflix put the success clearly at the feet of its recent online offerings, especially the way it has added Neflix online services, which now stretch to 12,000 pieces of video, to new devices such as Blu-ray players and set tops, so that the selections can be viewed directly on a home TV.
Two quarters ago Netflix disappointed with only 300,000 net additions, but last quarter upped the ante-considerably, jumping to 9.4 million from the 8.7 million it announced in October, a rise of 700,000 in one quarter. Now the company is saying that it has signed up 600,000 in half that time and its run rate is clearly accelerating. It is perhaps no co-incidence that it has launched multiple new deals including those with TiVo, on LG and Samsung Blu-ray players, on Microsoft’s Xbox and with the new dedicated Roku product, for its online service to reach new devices.
Netflix reiterated guidance provided to investors in January, that first quarter subscribers will be between 10.1 million to 10.3 million and full-year end between 10.6 to 11.3 million ‘ those figures now look like a huge under-estimate. The stock price fell slightly on this news, but only because smart money has been pushing this stock for the past three months, and it is likely some people were taking profits.