Netflix has released its Q3 earnings and the streaming video service has beaten Wall Street expectations.
The company has increased its user base to more than 40 million members, up from less than 30 million users just one year earlier.
In the filing Netflix revealed that 1.3 million members joined the service in the last quarter, up 11% from the same quarter last year.
So why has Netflix increased in popularity so quickly? The company attributes its success to popular original programming including Orange is the New Black, House of Cards, and Hemlock Grove among other programs. The company also believes that its Emmy nominations have helped spur interest in its services. Along with United States subscribers the company has also added 1.4 million new members internationally.
While Netflix’s DVD-by-mail service continues to remain flat, the company is still touting the ability to receive HBO shows and other pay TV content through its DVD service, noting that it “continues to be a source of satisfaction for 7.15 million domestic households.” Netflix’s DVD business generated $107 million in profit for the quarter.
Speaking to shareholders CEO Reed Hastings and CFO David Wells write:
“We were pleased with our global profitability for Q3. We delivered on our targets despite the faster amortization of original content, which pulled forward into Q3 about $27 million in expense from future quarters, due to more members and revenue than expected and by adjusting spending in Q3 on other items. The effect of the faster amortization of original content is small enough that we are not changing our domestic contribution margin targets (400 basis points Q over prior year Q) or our global profitability targets (stay profitable despite international investments).”
Company officials have now said they are considering a move into the movie business, although those plans have not been fully revealed.
One area Netflix is avoiding is live sports. Officials fully acknowledge that replayed sporting events from regular season games probably don’t hold too much interest for viewers. The company does offer a decent selection of sports movies, athlete, team, and league biographies, and sports documentaries.