Netflix has been busy boosting the amount of content available through its Watch Instantly streaming service, adding 300 new titles from independent distributors The Criterion Collection, Gravitas Ventures, Kino Lorber, Music Box Films, Oscilloscope Laboratories and Regent Releasing. Adding just 300 titles may not sound like a lot, but it reflects Netflix’s commitment to adding quality over quantity as it builds its streaming service.
Netflix has about 100,000 DVDs available through its rent-by-mail service, and about 17,000 titles available through its streaming service. But on the company’s earnings call, CEO Reed Hastings warned that focusing on the number of titles is misleading, because it doesn’t necessarily reflect the quality of the videos that are available, or the number of viewers they will attract.
“If we had chosen to, we could have had that years ago because we would have taken the smallest titles… So again, title count can be super misleading,” Hastings said, noting that those smaller titles include the type of extra-long tail content that only a select group of viewers tend to watch.
Instead of looking at the streaming service’s title count, Hastings urged analysts to think about how many of Netflix’s users are streaming video to determine how successful the service is. Netflix said on the call that about 48 percent of its subscribers used the Watch Instantly service in the fourth quarter, compared to 41 percent in the third quarter and 28 percent a year ago.
“What you really want to ask is, ‘When are we going to have two-thirds of our subscribers streaming? When is the content so good that two-thirds of our subscribers choose to stream?'” Hastings said. “The answer to that question for you, I would guess about one and a half years, just based on current trends of what we have seen growing.”
The strategy seems to be working so far, as Netflix added a million new subscribers in the fourth quarter, boosting its total user base 10 percent to stand at 12.3 million users. Netflix is expecting continued strong subscriber and revenue growth in the coming quarter and full year, forecasting total subscribers of between 13.5 million and 13.8 million in the first quarter and between 15.5 million and 16.3 million subscribers for the year.