Netflix subscribers now equal Comcast's
Video rental and streaming company nearly doubles profits from the same period last year. It now has as many users as Comcast.
The Netflix juggernaut showed no signs of slowing down during the first quarter of 2011.
On the contrary, for the quarter ended March 31 (PDF), Netflix reported worldwide net profits of $60 million, or $1.11 per share, on revenue of $719 million. The earnings for the Web's top video-rental service were nearly twice the $32 million the company saw for the same period a year ago.
A survey of 25 analysts by FactSet Research showed that Netflix was expected to earn $1.07 a share. As for the company's closely watched number of subscribers, Netflix reported that it now has 23.6 million subscribers worldwide (U.S. and Canada) and 22.8 million in the United States, the same amount that Comcast reported earlier this year.
Here's the difference in what that 22.8 million figure means for each company. The number of subscribers at Comcast is shrinking while Netflix's number is growing. Netflix added 3.3 million new subscribers during first quarter, and that number represents a 94 percent increase from the 1.7 million subscribers added in the same period a year ago.
Check out the number of subscribers Netflix has added domestically in each of the past five quarters, starting with the first quarter of 2010 (numbers are in millions): 1.7, 1.03, 1.80, 2.70, and 3.30.
What this means is that all those predictions about how Hollywood would choke off Netflix's supply of content leading to a slowdown in the number of people joining the service haven't occurred.
With consumers, Netflix's popularity is white hot.
Where's that slowdown?
To be sure, there are still plenty of threats to the company's growth. Executives from the major Hollywood film studios are likely poring over Netflix's earnings report. They are likely looking at the company's fat profits, sales, and margins and saying to themselves: "this company can afford to pay us more for content."
Film industry executives have told me that at this point in the development of Web streaming, Hollywood studios are still trying to learn how to charge for their shows and films. Translation: prices will go up. There is also concern that Netflix is hurting sales at traditional broadcast and cable outlets.
Starz and Showtime, two prominent pay TV services, have both said they would reduce the amount of TV shows they make available for Netflix's streaming service. (Showtime is owned by CBS, parent company of CNET.)
In the meantime, Netflix continues to defy the naysayers by getting its hands on important TV shows and films. Earlier this month, the company announced it had acquired streaming rightsto "Mad Men," the critically acclaimed show on cable channel AMC about a fictional 1960s advertising firm.
The company has even secured rights to a series that will appear at Netflix before it appears on any broadcast or cable channel. Netflix outbid HBO and others to acquire "House of Cards," a show starring actor Kevin Spacey.
As for predictions that Netflix will soon see increased competition, that may very well be, but whoever makes a run at Netflix, with its 23.6 million subscribers and growing at a clip of 3 million per quarter, better be prepared to make up a lot of ground.