Netflix Q4 2008 Results: 9.4 Million Subscribers & $359.6 Million in Revenue

Update: Seeking Alpha has posted a transcript of the investor webcast. (Thanks, Michael)

Netflix just announced Q4 2008 results, ending the quarter with more than 9.4 million subscribers and $359.6 million in revenue. 

• Q4 2008 revenue was $359.6 million, up 5% over Q3 2008, and up 19% over 2007. Total revenue for fiscal 2008 was $1.365 billion.
• Subscriptions were up 8% over Q3 2008, and 26% for the year. 
• Churn increased slightly to 4.2%, up from 4.1% in Q3 2008.
• Customer acquisition cost was $26.67 for Q4, down from Q3 2008 ($32.21) and Q4 20007 ($34.58).
• Netflix expects to buy back $175 million worth of stock in 2009.    

Outlook for 2009:

• 10.1 - 10.3 million subscribers in Q1 2009, and 10.6 - 11.3 million subscribers in 2009.
•  Q1 revenue of $387 - $393 million, and $1.58 - $1.635 billion for 2009.
•  GAAP net income of $15 - $20 million for Q1, and $88 - $98 million for 2009.

Notes from the earnings webcast:

• Part of the reason for strong subscriber growth is that Netflix underestimated the interest in consumer electronics devices, including Blu-ray players, Roku's Netflix Player, and the Xbox 360.
• The Microsoft Xbox streaming relationship is still exclusive (sorry Nintendo and PS3 users).
• Netflix pays consumer electronics partners for new customers.
• 700,000 customers are renting Blu-ray titles.
• Hastings said that Netflix will increase streaming spending in 2009 (more movies!).
• Netflix is seeing less DVD usage with some streaming customers. 

Comments

[Mike]

"The Microsoft Xbox streaming relationship is still exclusive (sorry Nintendo and PS3 users"

Netflix needs to get streaming on the PS3! Why would they have a exclusive partnership if "part of the reason for strong subscriber growth is that Netflix underestimated the interest in consumer electronics devices."

Sony and Netflix need to come to terms. I don't see how they can't have a relationship especially since Netflix helped support Blu-Ray and Sony early.

[Kevin]

It's probably exclusive because MSFT pays them enough to keep it exclusive. MSFT has a history of spending lots of money on this type of thing, such as lobbying Walmart to drop the laptops with Linux installed. I'm sure there's a time limit on it though, when the exclusivity deal will drop off and it will open to other consoles. It's common in other industries--Apple has an exclusivity deal with AT&T to carry the iPhone exclusively for 7 years.

[jason]

you can have netflix and hulu streaming right now try play on by media mall. it has a free two week trial and afterwards its 30 bucks.

[Gran]

Sony won't partner with Netflix for streaming movies because they offer their own movie download service. It would kill their own baby to do that.

[GC]

Microsoft has a pretty robust download service as well, that coincides with Watch Now.

The real issue here is Hastings sitting on the MS board.

[tsrblke]

I think GC got it right there. Frankly, I hope we get more streaming stuff. Right now it's a perk (although that's why I got Netflix in the first place) then when I found out how little there was, I stayed for the DVDs.
Starsplay adds some benfit by rotating out movies that otherwise wouldn't have been on there.
But I think IW is the future of Netflix, since it's inheriently cheaper.

[Rob]

Any possibility of Netflix signing deals with other networks to open up television viewership via streaming content? XBOX360 may get hulu. Sling, xbmc, and other services are likely to come along too. When will TV networks open up more to broadcasting in this manner?

[vitiris]

"Part of the reason for strong subscriber growth is that Netflix underestimated the interest in consumer electronics devices, including Blu-ray players, Roku's Netflix Player, and the Xbox 360."

And TiVo. This is why I am a new subscriber to Netflix. It amazes me how out of touch the media industry is, stop underestimating! The options need to keep growing, give us all movies via streaming and watch your customer base grow exponentially.

[Heffer]

Vitris - Its not that simple. Lot of politics involved.

Stream everything then your relationship with Best Buy, Walmart, Blockbuster, deteriorates. Not to mention Cable TV and the Networks.

Its a revenue stream balancing act. Sure a studio can say "Screw the B&M's and TV Stations", putting all their eggs into Netflix's basket, risk giving up leverage.

[Jason]

Part of the reason for strong subscriber growth is that Netflix underestimated the interest in consumer electronics devices, including Blu-ray players.

Is this why all of my recent Blu-ray releases are "Short Wait" or longer. I can get them via DVD, but not Blu-Ray.

[generic Viagra]

The company provides a monthly flat-fee service for the rental of DVD and Blu-ray movies. A subscriber creates an ordered list, called a rental queue, of movies to rent. The movies are delivered individually via the United States Postal Service from an array of regional warehouses. Currently, there are more than 50 shipping points located throughout the United States.[8] The subscriber can keep the rented movie as long as desired, but there is a limit on the number of movies (determined by subscription level) that each subscriber can have on loan simultaneously. To rent a new movie, the subscriber must mail a previous one back to Netflix in a prepaid mailing envelope. Upon receipt of the disc, Netflix ships the next available disc in the subscriber's rental queue.