Netflix users watch 2 billion hours of video in fourth quarter

The company doesn't say how that compares to previous quarters, but acknowledges that the high mark was achieved due to its international expansion.

Netflix users are watching boatloads of videos.
Netflix users are watching boatloads of videos. Netflix

Netflix ended an exceedingly difficult 2011 by announcing a big number.

The company said earlier today that during the fourth quarter of 2011, more than 2 billion hours of television shows and movies were streamed by users across 45 countries.

Unknown, however, is how that compares to prior quarters. "We haven't made that comparison but suffice it to say 2 billion hours is a big number and a high mark," a company spokesman said.

In October, Sandvine reported that Netflix accounted for nearly one-third of peak downstream traffic in the U.S., making it a bigger bandwidth user than basic HTTP (Web) traffic. In 2010, the company's streaming service accounted for less than 30 percent of all U.S. peak downstream traffic.

But that was about all the good news Netflix had last year. After deciding to raise prices 60 percent on customers who both rent DVDs by mail and stream video , the company faced massive outcry that saw subscribers leave in droves. An ill-fated decision to spin off its DVD-by-mail business into a new company , called Qwikster, made investors question CEO Reed Hastings and his top leadership. All the while, Netflix's stock price has plummeted . In just the last six months, Netflix shares are down 73 percent to $73.25.

For its part, Netflix thinks 2012 could be a banner year for its operation. It's planning to expand to Ireland and the U.K. sometime this year, and according to COO Ted Sarandos, customers will be able to watch "complete seasons of great TV series from all the major networks and most branded cable channels" this year.

It's the international expansion that Netflix is most convinced will turn things around. Even today, the company said that its viewing milestone was reached thanks in no small part to "global expansion."

But not everyone is so quick to agree that international expansion is the medicine Netflix needs. Wedbush analyst Michael Pachter says Netflix is following a strategy of "growth at all costs" without considering the impact its global expansion could have on profitability.

"At a minimum, we expect Netflix to lose $100 million internationally next year, and we think that the figure could rise to as much as $250 [million] to $300 million, based upon its Q4 guidance," Pachter said in a research note late last year.

 

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