Netflix (NSDQ: NFLX) reported yet another big jump in subscribers — and in instant streaming. The company says it now has 15 million subscribers, up 42 percent from a year ago and up from the 13 million it reported during the first quarter. Of those, 61 percent streamed a TV episode or movie for more than 15 minutes during the quarter, up from 37 percent during the same period a year ago.
While impressive, the subscription figures were in line with the guidance Netflix had provided last quarter, and the growth wasn’t enough to match Wall Street’s higher expectations for revenue. The stock is down nearly 10 percent in after-hours trading.
Revenue was $519.8 million, up 27 percent from $408.5 million a year ago but short of the $524.44 million analysts had forecast. Earnings per share did, however, come in at a better-than-expected 80 cents, which Netflix attributed in part to subscribers substituting DVDs for streaming, which costs Netflix less.
In his commentary on the quarter, CEO Reed Hastings said that the company’s growth — which he attributed to the “appeal of streaming” — was “astounding” but he also said “this kind of rapid acceleration is unlikely to continue for long.” Next quarter, however, the company is still projecting a 49 percent jump in subscribers.
Hastings says the company will be investing in both marketing and in streaming to drive subscriber growth. “If we find enough content deals where the terms make sense to us, we’ll be spending lots more on streaming content,” he says. “Otherwise, we can spend more on marketing.”
He says the company can now afford exclusive deals — like the one it landed with Relativity Media earlier this month — and is especially interested in exclusive deals for TV content.
As for new competition from Hulu — which recently introduced its Hulu Plus pay service, Hastings says that Netflix will incorporate what customers like about that service into its own. “The Hulu team is sharp, and we’re not going to underestimate them,” he says.