International sales increased an even faster 30%. The company also reported a record profit of $857 million during the second quarter and accelerated expansions ...
Goldman Sachs projects Netflix could triple its subscribers by 2015, as it moves to streaming-only.
Netflix Inc. will end distribution of DVD-based content by 2020 in favor of Internet streaming and become a competitor in the world of entertainment content ownership, predicts a December research brief by Goldman Sachs.
Netflix hasn’t commented on the report or issued any specific dates for ending DVD and Blu-ray distribution. But Netflix in its November third quarter earnings release did note that streaming content titles now represented 79% of all added movie and TV program titles, with DVD and Blu-ray discs making up the rest. Streaming content represented just 18% of added titles in the same period in 2009, Netflix says.
“Going forward, we anticipate that management will be most focused on acquiring digital content rights, and that digital will represent 80%-90% of additions over the next few years,” Goldman Sachs reports. Physical disc usage will peak in 2013, the report estimates.
“As Netflix’s business model transitions to streaming and away from physical media, we expect the company to become more aggressive in securing digital rights to film and television content,” the report says. Netflix has content agreements with ABC, Disney, NBC and Warner Bros., among others, for access to thousands of TV episodes and films.
In November, Netflix, No. 14 in the Internet Retailer Top 500 Guide, rolled out a streaming-only subscription plan for $7.99 a month and announced it was raising prices for its DVD-by-mail subscription plans. The company says its customers already watch more movies and TV episodes streamed online than on discs, with 66% of customers streaming more than 15 minutes of content in the third quarter of 2010, up from about 40% in the prior year period.
In its third quarter filing with the U.S. Securities and Exchange Commission, Netflix reported its total number of subscribers increased 52.3% to 16.9 million from 11.1 million in the third quarter of 2009. The company carries more than 100,000 DVD/Blu-ray titles and 20,000 digital titles.
“Q3 represents our fourth consecutive quarter of more than 1 million net subscriber additions,” CEO Reed Hastings said in the filing. “This growth is clearly driven by the strength of our streaming offering. In fact, by every measure, we are now primarily a streaming company that also offers DVD-by-mail. At the same time, the introduction of our streaming offering in Canada in late September has provided us with very encouraging signs regarding the potential for the Netflix service internationally.”
With the anticipated growth of Internet-capable TVs and consumer acceptance of streaming movies, TV episodes and other content, Netflix’s subscriber base will reach about 50 million in 2015, the Goldman Sachs report says. About 35 million of those subscribers will live in the U.S. while the rest reside outside the country. Additional foreign markets are expected to be served streaming content only, the report predicts.