The streaming video service’s CEO Reed Hastings made the comments in his first quarter letter to shareholders Netflix also said it added 4 million global subscribers to for a total of 48.35 million.
rack.1.mshcdn.com / Via Netflix
Netflix reported first quarter earnings that beat analyst expectations, but the bigger news is that the company said it plans to raise prices for subscribers and opposes Comcast's impending $45.2 billion merger Time Warner Cable.
Regulators are in the midst of reviewing the Comcast-Time Warner Cable merger, with an initial hearing held before the Senate Judiciary Committee on April 9 that < a href ="http://ift.tt/1elsJd7">lacked the presence of representatives from any big media companies that might be opposed to the deal because, to use Senator Amy Klobucher's (D-Minn.) words, "many programmers are afraid to go public with concerns about the Comcast-Time Warner Cable deal." Shortly thereafter, Senator Al Franken wrote a letter asking Netflix executives to voice an opinion about the deal, saying the company was "uniquely positioned to gauge the risks."
"If the Comcast and Time Warner Cable merger is approved, the combined company's footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband," Netflix CEO Reed Hastings wrote in his first quarter letter to shareholders. "Comcast could control high-speed broadband to the majority of American homes ... The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger."
Hastings's comments are the second blow he has dealt to Comcast after striking a deal under which Netflix would pay the aforementioned "interconnection toll" to ensure more reliable service for its customers streaming movies through Comcast. It was originally assumed that by inking the deal Comcast had made Netflix into a friend, but apparently that is not the case. In a blog post a few weeks after the deal, Hastings argued that big broadband providers should not be able to charge fees for faster and more reliable access.
Taken together, Hastings's blog post and Monday's outright opposition to the deal makes hollow his additional comment in Netflix's shareholder letter that since signing the deal with Comcast the cable giant "is providing a much improved Netflix experience to their broadband subscriber."
Jill Greenberg / Netflix
Hastings also wrote, in another surprise announcement, that Netflix plans to raise prices for certain subscribers, a move that may impact future subscriber and revenue growth. Netflix currently charges $7.99 for its streaming service, but the company has been experimenting with different price points, such as the ability to run four streams simultaneously for $11.99. When Netflix last reported earnings in January, Hastings said that he hoped to offer three different pricing options for new members, but added that he was in no rush to do so and was still researching its options.
On Monday, however, he disclosed that the company concluded that "a one or two dollar increase, depending on the country, later this quarter for new members only" is warranted. Existing subscribers will continue to pay their current membership fees "for a generous time period," Hastings wrote.
"These changes will enable us to acquire more content and deliver an even better streaming experience," he added.
Netflix released the second season of House of Cards during the quarter and, as usual, did not provide viewership figures, except to say that it "attracted a huge audience that would make any cable or broadcast network happy."
Netflix shares swing wildly based primarily on the strength of its subscriber addition numbers which, in turn, speaks to the strength of its marketing, content licensing, and original programming strategy. During the first quarter, the company added 2.25 million subscribers in the U.S., bringing its total to 35.7 million, exactly as it had previously guided analysts to expect. Internationally it added 1.75 million new subscribers for a total of 12.7 million. Combined, Netflix ended the quarter with 48.35 million global subscribers.
The company reported $1.27 billion in the quarter and net income of $53 million, or 86 cents per share, meeting analyst estimates on revenue and beating on net income. It said it expects to add another 1.46 million streaming subscribers next quarter, with the bulk of them, roughly 940,000, coming from overseas.
After closing the day up $2.75 to $348.49, Netflix shares surged in after-hours trading, gaining more than $20, to $372.05. That's still below its 2014 high of $454.98 reached on March 4, however.
via IFTTT
No comments:
Post a Comment