Netflix  reported their quarterly earnings  today, and the news was mostly--though not entirely--good. Revenue was $519.8 million, up 27% from the year-ago quarter, but fell a few million short of Wall Street expectations. As a result, the stock was down nearly 10% in after-hours trading. But the number of subscribers is up 42% from the year-ago quarter, up 2 million from last quarter--and there are sure to be more as Netflix expands northward into Canada .
There are also some very encouraging signs for Netflix's streaming video empire, even more interesting to those of us who have been following the company's transition to non-physical media. Of the now 15 million Netflix subscribers, a whopping 61% have streamed some sort of video for more than 15 minutes. That's way up: Only 37% did the same in the year-ago quarter.
But that has a slightly unfortunate effect on Netflix's business. Though many customers now use Netflix for its streaming capabilities than its traditional mail-order DVD and Blu-ray business, the company's pricing is still disc-based. So there has been a shift toward the cheapest possible option that still allows for streaming video, the $8.99 plan, because discs are becoming less important.
Netflix's average subscriber price, in turn, has lowered from $13.29 last year to $12.29 this year. It's not surprising, but it's something Netflix will have to think about.
Oh, and Netflix's CEO, Reed Hastings, had a few words for Hulu when asked if Netflix is concerned about Hulu 's move into paid subscription plans with Hulu Plus : "The Hulu team is sharp, and we’re not going to underestimate them."