Netflix profits rocket 88 percent, now rivals Comcast in subscribers

Figures for first quarter earnings suggest streaming video service Netflix is continuing to go from strength to strength. According to the company, profits in the quarter ending March 31 jumped a whopping 88 percent, coming in at $60.2m – that’s $1.11 a share (up from $32.3m 12 months earlier; 59 cents a share).

Netflix also reported revenue at a healthy $719m, up an impressive 46 percent. The California-based company said it added 3.3m US subscribers in the first quarter, as well as 290,000 new Canadian subscribers (making a total of 800,000 there). This makes a worldwide total of 23.6m subscribers.

At 22.8m US subscribers, Netflix is now equal to Comcast, the country’s biggest cable company. Netflix had been expected to pass Comcast with this latest set of figures.

In a letter to shareholders on Monday, CEO Reed Hastings and CFO David Wells put the rapid growth down to “increased spending on an ever-broader selection of TV shows and movies, our constantly improving personalization technology, and the Netflix brand.”

The company is looking to expand beyond North America by early 2012, possibly into the UK or Latin America. Also, in a big show of confidence, it recently made a move into original programming by licensing the exclusive rights to premiere Kevin Spacey’s House of Cards series in late 2012. This comes off the back of the original BBC House of Cards being a big hit on Netflix. If Spacey’s version also proves popular, expect to see more original content coming out of Netflix, something which would likely have traditional broadcasters quaking in their televisual boots.

There was, however, a slightly sour note to the end of the day’s proceedings for Netflix. Shares dropped 5 percent by the end of trading, with company profits for the current quarter estimated at less than what Wall Street has been hoping for. Netflix predicted they would have between 24m and 24.8m US subscribers by the end of the second quarter, with a net income in the region of $50m to $62m, and sales of between $762m and $778m.

Netflix, which launched more than 10 years ago as a DVD rental service, is now largely an Internet subscription service that for $7.99 allows subscribers to watch unlimited movies and TV shows streamed over the net.