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Netflix Celebrates Millionth Subscriber

27 Feb, 2003 By: Holly J. Wagner

An announcement that Netflix has reached the million-subscriber mark triggered a 14 percent increase in the company's stock price today.

The company's stock opened at $14.82 per share but quickly shot up to $16.50 on more than a million and a half shares traded.

“We're cresting a million subscribers. There's not many services that ever get to a million subscribers,” CEO Reed Hasting said. “We got there in three and a half years. That's faster to a million subscribers than America Online; they got to a million in six years.”

The million-subscriber mark includes 93 percent paid and 7 percent free trial subscribers.

Netflix was first to market with online rental, first to an initial public offering and the nearest contender in online subscriptions is a distant second.

“It's kind of a statement of credibility. We got to a million with pretty lean marketing, no Super Bowl ads,” Hastings said. So is he going to Disneyland? No,

“We'll have a little pizza party, beer and pizza and toast that we survived the dot-com debacle,” Hastings said. “At one point we got down to $5 million in the bank.”

In addition to the subscription milestone, Netflix announced the opening of another shipping center this week in Phoenix.

Netflix plans to open one or two facilities a month for the rest of the year as part of its strategy to provide one-day movie delivery to members. By year-end 2003, Hastings expects Netflix to reach more than 70 percent of its subscribers with “generally next-day service.”

The centers strive to regionally replicate the company's success and experience in the San Francisco Bay Area, where Netflix opened its first facility five years ago and claims 3.8 percent of all households there are Netflix subscribers. The region has received generally next-day service for four years.

The Phoenix facility is capable of providing generally one- and two-day turnaround service to more than 80 percent of Arizona's population and brings to 16 the total number of shipping centers Netflix has opened since early 2002.

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