Netflix Inc. earnings jumped 63% in the third-quarter despite controversial pricing changes, but a weak forecast for the fourth quarter sparked an after-hours sell-off that pushed the stock to a new low point.

Netflix Inc projected slower subscriber growth for its key U.S. video-streaming service, disappointing investors and sending its shares down 17 percent.

While Netflix reported a first-quarter loss that was not as steep as Wall Street projected, it warned that domestic streaming additions in the second quarter would be below that seen during the same period in 2010.

Adding customers to the instant-streaming business is key to the company's future as it moves away from mailing DVDs in its signature red envelopes.

"They are giving a signal to the Street their growth story is over," said Pachter, who rates Netflix a "sell."

For the first quarter, Netflix posted revenue of $870 million, up 21 percent from a year earlier. The company had a net loss of $4.6 million or 8 cents per share in the quarter, versus a net profit of $60.2 million a year earlier.

Analysts had expected a loss of 27 cents per share, according to Thomson Reuters I/B/E/S.

The company added 1.7 million U.S. streaming customers in the quarter, while losing about 1.1 million U.S. DVD subscribers.

On Monday, Netflix said it expected to return to profitability in the second quarter and launch in another European market in the fourth quarter of this year.

The move into another market may have added to concerns among investors, said Gabelli & Co analyst Brett Harriss.

Internationally, Netflix added more customers in its first three months of UK / Ireland availability than it did in the same period for Latin America or Canada, and expects its Canadian service to be profitable a quarter earlier than expected.

Netflix (NFLX) video subscribers are relying on the video service for TV viewing, reports Tech Crunch, citing a recent survey from Nielsen. The number of subscribers who prefer to use Netflix for its primary method for TV has grown to 19% from 11% a year ago.

Netflix Watch Instantly Cannibalizes Pay-TV VOD & Premium Channels Thanks to Lower Costs and Better Availability

Low cost and viewing flexibility give Netflix an advantage over pay-TV VOD and premium broadcast TV, according to a new study from Parks Associates on consumer video viewing. Choosing Content: Viewing Video found Netflix Watch Instantly rates higher in customer satisfaction than premium broadcast TV because of these factors. Netflix also topped pay-TV VOD in terms of cost.

“Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies,” said Brett Sappington, Director, Research, Parks Associates. “Parks Associates research shows consumers know the quality of the OTT service is not comparable to pay-TV quality, but the cost-benefit comparison is enough to affect their purchase decisions.”

The Netflix over-the-top (OTT) service also influences the decision processes of pay-TV consumers, raising the possibility of Watch Instantly cannibalizing pay-TV offerings. Parks Associates research found 16% of U.S. broadband consumers, when watching movies on VOD, consider instead using an online subscription service as an alternative. Similarly, 17% of those watching TV programs on a premium channel like HBO consider using Netflix instead.

"Netflix is competitive against VOD and premium channels because it has a decisive edge in cost,” said John Barrett, Director, Consumer Analytics, Parks Associates. “Its greatest weakness is picture quality, but there are times when the consumer will sacrifice quality for other considerations. Pay-TV providers should emphasize their inherent advantages in content and picture quality but also need to develop alternative services that counter Netflix's advantages in cost and flexibility.”

Pay-TV providers worldwide have adopted their own OTT services to combat independent services such as Netflix, but consumer awareness is low and few providers offer subscription OTT services. Comcast offers an OTT subscription service exclusively to its pay-TV subscribers, and DISH Network offers an online service to its subscribers via Blockbuster. Verizon and Redbox are partnering to offer an over-the-top service later this year.

http://www.parksassociates.com/blog/...pr-jun2012-ott

Netflix streaming tops 1 billion hours in month for first time

Netflix has reached a new milestone as the Watch Instantly digital streaming service saw more than 1 billion hours streamed last month.

CEO Reed Hastings announced the good news via the following message posted to his Facebook page this week:



There are a number of factors that have contributed to Netflix's latest achievement. Certainly the international expansion across Latin America as well as a foot in the door in Europe with a launch in the United Kingdom have helped.

Furthermore, the $7.99 monthly plan is continually more appealing to younger consumers who don't want to shell out anywhere between $50 to $100 each month for cable when they can access plenty of on-demand TV shows and movies on nearly every electronic device they own from gaming consoles to smartphones.

A first look at the Netflix Q2 numbers: Earnings of 11 cents a share on revenue of $889 million. The street was expecting five cents per share and $889 million. At least as important, though, are the video service’s subscriber numbers. Here investors were looking for 24.3 million domestic streaming subscribers, 9.1 million DVD subs, and 3.7 million subscribers from Canada, Latin America and the UK, and Netflix didn’t quite get there: 23.9 million domestic, 9.2 million DVD, and 3.6 million international.

The street is unhappy with something here: NFLX has plummeted 14 percent since the release hit the wires.

Here’s a possible warning flag for investors on Q3: Netflix is saying that the summer Olympics could impact growth. That’s the first time I believe I’ve heard them warn about that.

“For Q3 quarter-to-date, our domestic net additions are very nearly the same as Q3 2010 over the comparable partial period. In that quarter two years ago, we finished with 1.8 million domestic net additions. However, in the middle of that quarter, we launched Netflix on the iPhone to great reception, and we don’t have an equivalent launch this quarter. Moreover, this quarter the Olympics are likely to have a negative impact on Netflix viewing and sign-ups. So, our Q3 guidance is 1 million to 1.8 million domestic net adds. If we finish Q3 in the high end of that range, we would remain on track for 7 million domestic net additions for the year; otherwise it would be challenging to achieve that goal by year end.”

That said, the guidance that Netflix is offering for Q3 would seem to be what investors were looking for: Up to 25.7 million streaming subs, 4.4 million international and 8.7 million DVD subscribers.

http://allthingsd.com/20120724/netfl...D_yahoo_ticker