Hacking NetFlix

Netflix to Sell 3.5 Million Shares

Netflix issued a press release to announce that they will be selling 3.5 million shares of common stock in a public offering in May. At the current stock price, Netflix should raise more than $100 million.

Update: The price per share will be $30, and according to Reuters Netflix will "...use the proceeds for general corporate purposes including possible acquisitions and working capital." The Motley Fool wonders, Why, Netflix, Why?

Blockbuster Q1 2006 Results

Video Business is reporting that Blockbuster lost only $1.9 million in Q1, vs. $57.5 million a year ago ("Blockbuster Narrows Q1 Loss"). Blockbuster Online ended the quarter with 1.3 million subscribers, and promised to promote the service more in the second half of the year.

The "no more late fees" program may actually be working:

Antioco said that comparisons with its franchisees that haven’t implemented the no late fees policy show the strategy is now paying off in terms of revenue. Since late fees were eliminated, the corporate stores have outperformed the franchisees in active member numbers, he said, showing that the corporate stores are doing a better job of retaining customers.

Blockbuster Q1 2006 results press release.

Mother's Day Netflix Envelope

Dave Zatz sent in the latest Netflix envelope ad:

Netflix Expands HD DVD Collection

Netflix has expanded the list of HD DVD movies:

You can view the list by clicking on the "Browse" tab and then you'll see "HD DVD" under "Other Genres."

Some of the movies don't have release dates, but the list should give you an idea of the type of movies that will be available from Netflix if you're thinking about buying a HD DVD player.

Taking a Netflix Vacation

Chokichoki writes:

I've been thinking of starting a subscription to netflix, but I'm going on vacation for a month & I don't want to pay the full price, but not use it for a month. Does netflix offer a vacation option?

Netflix will save your queue if you quit for up to 90 days, and you can extend it in 90 day increments. Netflix will also also let you set the restart date, or you can log in and manually restart the service.

Netflix "Friends & Family" One-Month Free Trial

Netflix is sending e-mails to subscribers offering a free, one-month trial for "friends and families:"

DVD-by-Mail Traffic Comparison

Amazon's Alexa service, while not perfect, is commonly used to compare Web site traffic. The following chart compares Netflix, Blockbuster, Movielink, and Peerflix over the past year:

It's interesting to note that the traffic for most of the sites was basically flat, except for a huge seasonal increase for Netflix. Netflix currently ranks as the #100 site (3 month average), followed by Blockbuster (#433), Peerflix (#4,405), and MovieLink(#5,874). Pageviews is another metric used to measure Web sites, and the three-month average for each of the sites: Netflix (8.3), Blockbuster (8.8), Peerflix (5 - 9), and MovieLink (6 - 9).

Netflix Q1 2006 Profit & More

Netflix announced Q1 2006 results (press release):

Netflix posted a first-ever Q1 profit of $4.4 million on $224.1 million in revenue, a 47% increase over the same period last year.

Subscriber acquisition costs declined slightly to $38.47.

Churn declined to 4.1% (a historic Q1 low), compared to 5.0% for Q1 2005.

Netflix ended the quarter with 4.866 million subscribers, a 61% increase over Q1 2005 (more than 700,000 additional subscribers).

They are forecasting 5.1 to 5.3 million subscribers in Q2, and 6.3 million by the end of the year.

Notes from the Q1 2006 investor conference call:

Hastings regrets not spending $2 million more on marketing, delivering even higher subscriber growth due to the strategic value of new customers.

Surprising household penetration numbers: Menlo Park, California: 22% and Jamaica Plains, Boston: 19%. Growth in high-penetration communities actually accelerates due to word of mouth.

Netflix will pass 5 million subscribers this quarter.

Hastings says they expect a slowdown in DVD purchases due to the launch of HD DVD. They believe that DVD rentals won't be affected.

The DVD format war will continue for several years, and it will hurt consumer adaptation of the new players. Netflix hopes that the studios will support both formats.

"HD movie access is free -- for now."

By the end of this year Netflix will communicate a clear timeframe for download delivery of movies for Netflix subscribers.

Blockbuster added 200k net subscribers in Q1, and with Netflix's 700k adds, a total of 900k customers moved to online services.

The cost of the patent lawsuit is included in the guidance, and it will probably take several years to litigate.

The business is growing faster than expected: Netflix raised guidance 4 times last year, and twice already this year.

Netflix is focused on the U.S. market and has no near-term plans to launch in the U.K. or elsewhere.

The Internet Stock Blog has posted a transcript of the call.

Netflix "Gangster" Commercial Download

I got a copy of the new Netflix "Gangster Movie" commercial starring Tony Sirico (he's "Paulie" on the Sopranos) and made it available for download (warning: the QuickTime file is 2.9mb and may take time to download).

USA Today Profiles Netflix CEO Reed Hastings

USA Today profiled Netflix CEO Reed Hastings ('Charismatic' founder keeps Netflix adapting), and took a rare look inside the secretive company.

The meeting highlight was a traffic report from the previous Sunday's Oscars telecast. Customers swarmed the site throughout the show, adding a combined 33,449 movies to the wish lists they build in their online accounts.

Finally, Hastings asked employees for surveillance reports on nearby Blockbuster closings. An employee shouted the location of one with the enthusiasm of a hunter bringing home a trophy.

The meeting ended, and workers filed past a huge bottle of sparkling wine, festooned with the tag: "To be opened when we surpass five million subscribers."

A new feature, still on the drawing board:

Employees demonstrated software that would let customers access the site from cellphones, searching for DVD titles and adding them to wish lists. Hastings warmed to the idea, but asked how it would work on different cellphone screen sizes. The meeting ended on a high note. Hastings called the ideas presented "unbelievably cool."