October 21, 2013, 4:12 PM

Netflix membership grows 37% in Q3

The retailer reports a 22.2% increase in worldwide revenue in Q3.

Lead Photo

CEO Reed Hastings

Streaming video service Netflix Inc. has increased its worldwide membership by about 37% year over year in the third quarter to 40.28 million subscribers from from 29.41 million subscribers.

 “We have done well but we have a long way to go to match HBO’s 114 million global member count or their well-deserved Emmy award leadership,” write Netflix CEO Reed Hastings and chief financial officer David Wells in a letter to shareholders released with the earnings report. The membership count they refer to is for viewers who subscribe to either or both of Time Warner Cable’s premium channels HBO (Home Box Office) and Cinemax, according to Time Warner’s web site.

Netflix revenue hit $1.106 billion in Q3, up 22.2% from $905 million in Q3 2012. To date, revenue is $3.199 billion. In the third quarter, Netflix won three Emmy awards from the National Academy of Television Arts & Sciences for its original political thriller “House of Cards,” which was the first series to take the honor without first airing on any broadcast or cable networks, the company says. Three of its original series together garnered 14 nominations for the TV award.

Netflix is No. 9 in the 2013 Internet Retailer Top 500. In addition to competing with premium channels like HBO and cable and satellite operators offering TV shows and movies on a pay-to-watch basis, it also competes with Amazon.com Inc., No. 1, which provides streaming videos through Amazon Instant Video and its Prime membership program, and the streaming video web site Hulu LLC, No. 92.

“While our original series get most of the headlines, a bigger percentage of overall Netflix viewing is generated by our exclusive complete season-after series,” Hastings and Wells write in the letter. For instance, Netflix in Q3 licensed and began streaming the just-ended seasons of six popular network shows, including “The New Girl” and “Breaking Bad.”

Hastings and Wells say that in Q3 Netflix also:

  • Added features for household members sharing a Netflix account to personalize their own viewing lists and preferences.
  • Made its first deal with a cable operator in the United Kingdom, Virgin Media; it will provide show search results and suggestions to Virgin Media customers via set-top boxes starting in Q4.
  • Expanded into the Netherlands, the 41st country in which it operates.

For the third quarter ended Sept. 30, Netflix also reports:

  • Net income was $31.82 million, up 314.3% from $7.68 million in Q3 2012. To date, it is $64 million.
  • 31.1 million domestic subscribers, who together generated $701.1 million in revenue, up 26.1% from $556.0 million in Q3 2012. To date, domestic streaming revenue is $2.01 billion.
  • 9.2 million international subscribers, who together generated $183.1 million in revenue, up 135.6% from $77.7 million in Q3 2012. To date, international streaming revenue is $491 million.
  • 7.1 million domestic DVD subscribers—who pay an additional $7.99 per month to borrow one DVD at a time by mail and may pay $2 more for Blu-ray discs—together generating $221.9 million. Netflix’s domestic DVD subscribers have been declining for the past several quarters, and were down 17.4% from 8.6 million in Q3 2012.

 

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