Netflix Adds 1.2M More Users Than Expected, Stock Jumps

 
 
By Chris Preimesberger  |  Posted 2016-10-17 Print this article Print
 
 
 
 
 
 
 

The higher-than-projected number of new subscriptions consisted mostly of viewers in international markets, Netflix CEO and chairman Reid Hastings said.

Netflix, which has sunk a large investment into creating and producing its own original content, turned in a strong quarterly earnings report Oct. 17, calming the fears of some investors who worried about the subscription movie channel's churn through its capital store.

The Los Gatos, Calif.-based streaming video provider mightily exceeded its projections for new subscribers in the quarter that ended Sept. 30, signing up 3.2 million new customers. That was 1.2 million more than it told investors and the Securities and Exchange Commission, and the news sent its stock price flying by 20 percent in after-hours trading.

The higher-than-projected number of new subscriptions consisted mostly of viewers in international markets, Netflix CEO and chairman Reed Hastings said on a conference call to analysts.

Netflix, which moved its entire distribution from its own data centers to the AWS cloud last February, also completed a near-global expansion this year, thanks largely to the AWS deal. The service, which now is available in 170 countries, is betting that its mix of new-gen original content that has succeeded in the United States will also work in Europe, the Pacific Rim and in South America.

Netflix has come up with edgy productions such as the political drama "House of Cards," horror show "Hemlock Grove," prison dramedy "Orange Is the New Black," drug-trade drama "Narcos" and the science-fiction/horror series "Stranger Things." All of them have earned loyal audiences.

In addition to the 3.2 million international subscribers in the quarter, Netflix added 370,000 U.S. subscribers in Q3, more than 20 percent more of its forecast of 300,000. However, the U.S. numbers were down noticeably below the year-ago quarter's 880,000 new customers. Analysts have said the slowdown is indicative of how the U.S. streaming market is maturing, as more consumers sign up for multiple services including Netflix, Epic, Amazon.com, Hulu and others.

Netflix stock rocketed up nearly 20 percent to $119.35 in after-hours trading. Before that, the stock had eroded by 13 percent during this calendar year.

Netflix's Oct. 17 report of 3.57 million new streaming subscribers globally brings its total customer base to about 83 million paid users.

 
 
 
 
Chris Preimesberger

Chris Preimesberger is Editor of Features and Analysis at eWEEK. Twitter: @editingwhiz. Join us Nov. 9 for our next #eWEEKchat: "Trends in New-Gen Mobility and Mobile Devices."

 
 
 
 
 
 
 
 
 

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