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Analyst: Netflix Added 400K Domestic Subs in Q4

20 Jan, 2012 By: Erik Gruenwedel

Netflix is projected to have gained 400,000 domestic subscribers in the fourth quarter (which ended Dec. 31), in addition to another 1.7 million subs in the first quarter ending March 31, an analyst said.

Eric Wold, with B. Riley & Co. in Los Angeles, said Netflix is bouncing back strongly from last fall’s PR gaffes as evidenced by management’s disclosure that more than 2 billion hours of content was streamed in Q4. Netflix also commanded 55% of the subscription/transactional video-on-demand market in 2011, which The NPD Group said accounted for 31% of all video rentals.

Wold said Netflix’s aggressive content spending continues to elevate the bar, while domestic competitive pressures remain weak. The analyst said consumers are increasingly attracted to lower-cost rental options, including kiosks, and opt for streaming competitors such as Amazon Prime (for shipping) and Hulu Plus (exclusive network shows) for specific reasons.

Indeed, SVOD service Hulu Plus added 1.5 million subs during a period when Netflix added 7.7 million subs, Wold said.

“In our opinion, stabilizing domestic streaming sub trends will lessen competitive concerns, while strong initial results from the Latin American launch will help revive optimism towards Netflix not being just a domestic-only phenomenon,” the analyst wrote in a late Jan. 19 note.

Netflix, which reports fourth quarter results Jan. 25, has seen shares rise 40% since last November.

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