Netflix reports subscriber bounce, more international plans

Netflix said that its relaunch of Arrested Development helped boost membership numbers in its second quarter, with more gains expected in the current quarter with its forthcoming Netherlands launch. 

Announcing its second quarter earnings, Netflix confirmed that the Netherlands launch would come “within the quarter” and set its sights on further international rollouts – though did not comment on what markets would come next.

“Netherlands is about half the size of Canada, and is a good opportunity for us as we prepare for entry into more markets.  We’ll continue to expand in 2014 based upon the progression of our existing markets and on confidence in the expansion opportunities,” said CEO Reed Hastings and CFO David Wells in a letter to shareholders.

On the firm’s earnings call Hastings added: “We are investing substantially all domestic profits in international expansion and we think that’s very smart. If you look at our international growth, it’s tremendous. We think there is a huge opportunity around the internet in the international markets and we’re investing for the long term in that.”

In Q2 Netflix added 630,000 domestic streaming customers, taking this number to 29.8 million. International streaming customer numbers grew by 610,000 to 7.75 million.

Netflix said that though it expected net additions in Q2 to be lower than the same period last year, this quarter proved an exception “we believe due to the launch of Arrested Development.” Netflix said that the show already had a strong brand and fan base, generating a “small but noticeable bump in membership when we released it.”

The show is one of a string of original productions that Netflix has launched and follows the release of Lilyhammer, House of Cards and Hemlock Grove with prison drama Orange is the New Black having also recently gone live.

Netflix said that each has “engaged large audiences” across its markets and has allowed it to broaden its overall reach. The firm announced that it will now be expanding its Netflix Originals initiative “to include broadly appealing feature documentaries and stand-up comedy specials.”

In terms of other new developments, Netflix said that in Q3 it will be rolling out its profiles features that will allow households to have distinct profiles for different members or viewing tastes within their home, offering “a much more personalised experience for our members.” It added that improvements to its recommendation algorithm in Q2 now means more than 75% of the hours streamed on Netflix come from personalised suggestions.

Overall in the quarter, Netflix reported global revenue of US$1.069 billion, up from US$889 million in the same quarter last year. Net income came in at US$29 million, up from US$6 million year-on-year.