Netflix has reported strong growth in Q4 2010, with more subscribers and income than ever before, mainly due to the streaming portion of its service. However, the company has noted the threat posed by ISPs looking to start charging for data rather than offering unlimited plans.
Strong End To 2010
Netflix has revealed how it performed in the last quarter of 2010, and strongly is the only suitable word.
Netflix now boasts more than 20 million subscribers, 7.7 million of which were added in 2010, 3.1 million of which were added in Q4. Netflix originally predicted adding 3.6 million over the course of the year, an estimation it more than doubled.
The new streaming-only plan, which totally nullifies the DVD-by-mail part of Netflix’ business, helped a great deal, accounting for around a third of all new subscribers gained since its introduction.
Revenues for the quarter rose 34 percent to $596 million, with net income rising 52 percent to $47 million or 87 cents per share.
International & ISPs
Moving beyond the numbers, Netflix took the time to talk about two subjects which could prove important to the company during 2011.
Praising the results it has so far seen in Canada as “excellent,” Netflix is looking to expand further afield internationally within the next 12 months. It hopes Netflix Canada will be profitable by Q3 2011, and should this be the case then a second market will be added (I’m hoping the U.K.).
What could hit Netflix hard is the trend towards ISPs switching from unlimited-up-to-a-large-cap models to pay-per-gigabyte models for data usage. Along with other online video companies, any such move could harm its business in a big way. The statement from CEO Reed Hastings is discussed further on GigaOM.
Conclusions
Netflix appears to be doing everything right: expanding internationally as slowly as it needs to, and investing heavily in content to persuade even more people to subscribe. Unfortunately it looks as though its future is threatened by what it regards as greedy ISPs seeking to (over)charge their customers.
