Netflix Subscribers Stream In, With No Sign of Slowdownby
Sure, Netflix could one day hit a wall in its U.S. subscriber growth—with every American who wants it already subscribing—but that day is certainly not here yet.
The video subscription service added 2.3 million subscribers in the fourth quarter (PDF), including free trial subscriptions, giving it a total of 33.4 million in the U.S. That was enough to top the 33.1 million average of 10 estimates compiled by Bloomberg.
Netflix said Wednesday that it expects to sign up another 2.25 million subscribers in the first quarter, with “years of member growth ahead of us,” according to a company letter to shareholders. Netflix shares soared nearly 18 percent in trading after the market’s close, following a 1.5 percent gain to $333.73 in the regular session.
That growth could come alongside higher costs if Verizon Communications and other high-speed Internet companies decide to charge video streamers like Netflix, Amazon, and Hulu more because of their higher usage of the digital infrastructure. At peak times, Netflix viewers represent about a third of U.S. broadband Internet capacity, according to some estimates. In a case decided last week, Verizon successfully blocked federal rules on net neutrality, which could allow the Internet providers to block streaming services or to charge higher fees for their heavy data loads.
Netflix Chief Executive Officer Reed Hastings dismissed those concerns Wednesday in the company’s quarterly earnings chat with two Wall Street analysts, arguing that any such efforts “would significantly fuel the fire for more regulation, which is not something that they’re interested in,” he said of the Internet service providers. “I think our economic interests are pretty co-aligned.”
He also predicted that the gradual introduction of higher-resolution 4K video from Netflix and other services will slowly boost ISPs, which will expand their technical capabilities to deliver the bandwidth needed for such video. Most people who get Internet service from major high-speed players such as Comcast, Time Warner Cable, and AT&T do not currently have download speeds that can handle this kind of video.
“If you’re on the cost side of an ISP, then you may be affected by that and think about that,” Hastings said. “But if you’re on the revenue side, you’re celebrating. Because now there’s a real need to get a 40- or 50-megabit plan. Now you have something to get people to upgrade to the faster plans.”