Subscribers Jump At 'TV Network' Netflix

by , Apr 23, 2012, 7:34 PM
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Netflix CEO Reed Hastings hammered home Monday that the company believes it is squarely in the TV business, saying that increased competition for exclusive content is “a natural outcome of us becoming a network like other cable networks."

He also used the term “Internet television” to describe the company, which finished the January-March quarter with 23.4 million streaming subscribers in the U.S., following 1.7 net additions in the quarter.

The company predicts it will end the year at close to 29 million streaming customers in the U.S., which would be equal to about 30% of homes that pay for TV service.

Netflix is moving to acquire exclusive rights to TV shows that have run elsewhere -- such as AMC’s “Breaking Bad” -- while launching content it produces itself, such as “Lilyhammer,” which came online in the first quarter.

On an earnings call, Hastings said “Lilyhammer” consumption has not proved to be “hugely significant,” but as the company adds more of its homegrown content, it expects that portion of its offerings to make up a “nice percentage of our total viewing.”

Hastings did say that “Lilyhammer” has had a level of success similar to “Breaking Bad” in “cost-to-viewing ratio.”

In a letter to investors, Netflix made a subtle pitch to networks to make more content available to it, positing that airing past seasons of a show on its platform can help boost ratings. It noted the significant increase in ratings for the recent season five debut of “Mad Men” after the first four seasons became available since last summer. Furthermore, it said, the most-watched “Mad Men” episode on its service on a given day is the series debut.

“This means we are still growing the fan base for this show nearly six years after it first premiered on television,” the company said.

Netflix noted that it watches competitors Hulu and Amazon Prime, but believes its most significant competition over the long term comes from the TV Everywhere-type offerings of cable/satellite/telco TV operators. In the short term, these “steps to evolve to Internet TV networks” should be a manageable threat.

“Given the superiority of our content selection, user interfaces and device ubiquity, we don’t currently see any meaningful near-term impact on our business from these developments,” Netflix said.  

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