April 21, 2014, 4:40 PM

Netflix hits $1 billion in streaming revenue in Q1

The on-demand and rent-by-mail movie and TV show provider also grew its streaming subscriber base to more than 48 million consumers worldwide. It projects its international segments will become profitable this year.

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Netflix Inc. has reached $1.066 billion in revenue from its streaming video subscribers in Q1, up 36.5% from $781 million in Q1 2013, it reported this afternoon. For the first quarter ended March 31, Netflix grew its global streaming subscriber base to 48.35 million, up 33.2% year over year from 36.31 million in Q1 2013 and up 9.0% from 44.35 million in Q4 2013.

International revenue from streaming continues to account for 25% of the retailer’s total streaming revenue, or $267 million in Q1, a milestone it first reported at the end of fiscal 2013. Netflix offers its monthly subscription service to stream movies and TV shows over the Internet in 41 countries. In the first quarter, its international subscriber base increased by 1.75 million, for a total of 12.7 million foreign customers, the company says.

In the United States, Netflix added 2.25 million streaming members in Q1, for a total of 35.7 million customers. Domestic streaming revenue in the first quarter was $799 million, up 25.0% from $639 million in Q1 2014.

CEO Reed Hastings and chief financial officer David Wells write in a letter to shareholders today that Netflix plans to increase later this quarter the monthly price for its streaming services—currently $7.99 per month in the United States—by $1 or $2 for new members, depending on the country. Existing Netflix subscribers will remain grandfathered into their original prices “for a generous time period,” the two executives say. “These changes will enable us to acquire more content and deliver an even better streaming experience,” they write. The company tested the move in Ireland in January, raising the price of its streaming subscriptions for new customers by one euro to 7.99 euros, while allowing existing customers to keep their 6.99 euro-per-month subscriptions for two more years.

Netflix plans to expand into new European markets in the second half of the year, Hastings and Wells say, without giving specific locations. The company expects its international segments to become profitable for the first time this year, they add.

For the first quarter ended March 31, Netflix also reports:

  • Total revenue of $1.270 billion, up 24.1% from $1.023 billion in Q1 2013.
  • Net income of $53.12 million, up 1,874.7% from $2.69 million in the same period last year.
  • Revenue from DVD rentals in the U.S. (Netflix does not rent discs internationally) of $98 million. Hastings and Wells write in the letter that they expect the DVD business, which the company has been phasing out, to shrink to $92 million in revenue in the next quarter.

Along with today’s earnings, Hastings and Wells reiterated in the letter to shareholders their opposition to the planned merger between cable behemoths Comcast and Time Warner Cable. The move, they say, will make it easier for the combined company to charge consumers and web service providers unfairly for the speed and amount of data transmitted through its cable and fiber optic networks.

Internet businesses have been voicing their opposition to what they call such premeditated, purposeful inhibition of Internet access more publicly in recent months, following a federal court ruling in January that struck down the Federal Communications Commission policy known as “net neutrality.” The policy previously required that all Internet traffic be charged at the same rate. 

“As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix,” Hastings and Wells write. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers.”

Netflix is No. 7 in the 2014 Internet Retailer Top 500 Guide

 

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