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Netflix Subscriptions Up

2 Jul, 2002 By: Holly J. Wagner


Netflix, Inc. ended the second quarter of 2002 with 670,000 total subscribers, a 118 percent year-over-year increase from the 308,000 total subscribers at the end of the second quarter of 2001 and an 11 percent sequential increase over the 603,000 total subscribers at the end of the first quarter of 2002, the company reported.

The gains are good news for Netflix, but still leave a long way to go to make the million subscriber mark analysts say will bring Netflix to net profit.

The rent-by-mail e-tailer acquired 236,000 new trial subscribers in the second quarter for a 168 percent year-over-year increase from the 88,000 new trial subscribers in the second quarter of 2001 and a sequential decline of approximately 24 percent over the 312,000 new trial subscribers in the first quarter of 2002. This compares to a 39 percent sequential decline in last year's second quarter from the first quarter of last year.

Historically, the company has experienced rapid growth in new trial subscribers in the fourth and first calendar quarters, pacing holiday sales of new DVD players, followed by a period of relative slow seasonal growth in the second calendar quarter.

Average monthly churn for the second quarter of 2002 was 6.7 percent. This compares to average monthly churn of 7.1 percent in the second quarter of 2001 and 7.2 percent in the first quarter of 2002. Churn includes free trial subscribers as well as paying subscribers who elect not to renew their monthly Netflix subscription service.

Netflix has benefited from the increasing popularity of the DVD format. Market research firm NPDTechworld reports that 31 percent of all U.S. households have a stand-alone DVD player. Netflix also has likely benefited from the emergence of DVD players priced lower than $100, further accelerating mass-market growth, a spokesperson said.

Netflix will release its second quarter 2002 financial results July 24.


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