Netflix Added 2 Million Subs in Q3 2012 and Ended Quarter with $905 Million in Revenue

Netflix released Q3 2012 results and ended Q3 with more than 29 million subscribers and $905 million in revenue. Highlights from the financials:

Netflix ended Q3 with 25.1 million domestic subscribers (23.8 paid), and 4.31 internatioal subscribers (3.69 paid). DVD subscribers declined to 8.61 million (8.47 paid).

Global revenue was $905 million, with domestic streaming bringing in $556 million, international at $78 million, and VD at $271 million. Netflix ended the quarter with a modest $8 million in profit (13 cents per share). 

For Q4 Netflix is forecasting 26.4 to 27.1 million domestic and 5.2 to 5.9 million internations streaming customers (paid and trial subs), and possible a loss of $13 million to a possible profit of $2 million in income. DVD subs will continue to decline to 7.85 to 8.15 million subs, but will contribute $117 to $129 million in profit, offsetting international losses of $119 to 107 million. 

In a letter to shareholders Netflix cites two metrics to gauge increased customer satisfaction: "We increased our per member viewing in Q3 by more than 30% (year over year) to record highs by improving our content and member experience; and our voluntary churn is generally the lowest it has ever been.1 In contrast, involuntary churn has been increasing as we grow more mainstream and attract more lower-income households."

TV is huge for Netflix, and they note that 6 of the top 10 TV shows are exclusive to Netflix, and the rate is slightly higher for the top 50. 

Netflix published a chart to show that streaming obligations have stabilized:

Netflix is competing in the recently launched Nordic countries directly with HBO, and it'll be a battle everyone will be watching closely, as Hastings believes that HBO will eventually unbundle HBO GO in the USA and compete directly with Netflix.

Interesting stats from Q3: Netflix streamed 3 billion hours of movies and TV shows and there are now more than 800 Netflix-ready devices. 

Comments

[CordCutter]

HBO will never unbundle HBOGo unless there is a massive change in the industry. Dish TV is looking into rolling out an over the top web service with Scripps, Viacom and some other providers but that is strictly a rumor now.

HBO doesn't want to risk their relationship with the cable providers. Something ridiculous like 80% of folks who get an HBO free trial keep it once the trial is up. If you p-off the cable companies and encourage cutting the cord they will end those free trials. HBO would have to gain more subs via standalone HBOGO than they would lose via their free trials.

[Moviegeek65]

Great news but the stock is tanking today, I guess the loss of DVD subscribers has something to do with it.

[El Don]

"Netflix ended Q3 with 25.1 million domestic subscribers (23.8 paid), and 4.31 internatioal subscribers (3.69 paid)"

Who are the "unpaid"?

[mrmanmac]

Netflix.... it is time to truly compete with Amazon, Itunes, vudu, and all the other Pay per View sites. What have you got to lose? go ahead and offer pay per view along with the streaming. I won't rent any, because I subscribe to both streaming and DVD rental, and think less than 20 bucks is the best deals out there considering I can get ANY movie or TV show long before HBO, Showtime or any other cable offering. These wall street guys just don't have a clue what it is you are trying to do, or how much your subcribers love the service.

[Ethan]

El Don, that would be people in free trials.

[Stroker Ace]

Why do they not even try to sell subs to the DVDs anymore? It MAKES MONEY!?!?!?!?!

[GeeEmm]

Indeed, Stroker Ace. Until NF is able to offer its entire catalog of available titles through streaming - and I can't ever see that happening as it would be astronomically expensive - then discs are not only viable, but vital to the success of NF, and to the satisfaction of its members.

I subscribe to both, but much prefer discs, as the selection is so much more diverse, and the video quality (for me thus far) is far superior. I am not interested in becoming a streaming-only customer.

[mrmanmac]

They could offer the entire catalog if most of it was pay per view, which is exactly what Amazon does. They bait you in the Prime, but the vast majority of their offering is 3.99 or more per movie.

I too subscribe to the DVD service primarily for the newer movies that they can't get the streaming rights to.

In a few years when all of the contracts with likes of Starz, HBO, and Showtime run out Netflix will be able to bid on it. When that happens they will really be able to expand the streaming library.

[ice tube machine]

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[El Don]

Thank you Ethan. Wow, that seems like a lot.

[Walt D in LV]

Love it!
Once again, Netflix shows that not only do DVDs bring in more money, but they have a profit margin THREE TIMES that of Streaming!

I am SO trying to understand why they are allowing this hugely profitable part of their business die a slow death.