Netflix ends year on a high note, calls House of Cards “defining moment for Internet TV”

Gigaom

Netflix CEO Reed Hastings and CFO David Wells put a big emphasis on the company’s upcoming launch of its scripted original series House of Cards in their Q4 results letter to investors (PDF) Wednesday, writing: “We believe that February 1st will be a defining moment in the development of Internet TV.”

Netflix is set to launch the show, which will star Kevin Spacey, in its entirety to all of its subscribers in any of its 40 markets on that day. The two executives argued in the letter that this model will not only “delight international members,” who are used to long release windows from other TV properties, but eventually also prove to change the face of television. “We believe original series developed for Internet TV will be better for creators, better for consumers, and better for Netflix,” the letter states.

That bold outlook comes at a day when Netflix beat market expectations by ending 2012 in black as well as with more than 33 million worldwide subscribers.

The key metrics:

  • Netflix saw $945 million in revenue in Q4 of 2012, compared to $876 million in Q4 of 2011.
  • The company booked a net income of $8 million. That may look low when compared to $35 million in Q4 of 2011, but is above its own Q4 guidance, which topped out at $2 million.
  • Earnings are $0.13 a share, compared to $0.64 in Q4 of 2011.
  • In the U.S., Netflix now has 27.15 million streaming subscribers.
  • International subscribers came in at 6.12 million.
  • DVD subscriptions continue to decline to 8.22 million, but the rate in decline considerably slowed: In Q4 of 2011, Netflix reported the loss of 2.76 million DVD subscribers. This time around, it only lost 380,000.
  • That last number is important because DVD subscribers still make up for a big chunk of Netflix’s profits — the contributing margin was 50.1 percent in Q4, to be precise.



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