Netflix adds 1.7 million customers despite losing Starz movies

Netflix April 2012 New ReleasesAt the end of February 2012, Netflix’s contract with Starz ended and about 840 popular films and movies were removed from the service. Included in this batch of movies were most of the service’s new releases. Thanks to Starz, it had been getting big theatrical releases like Toy Story 3 available for streaming not long after their DVD release. No longer. In September, Starz ended negotiations with Netflix, hoping to make different, better deals with other companies, or to, perhaps, go it alone and start up a rival service. 

It’s been about two months since then and Netflix has announced its financial results for the first three months of the year.

The good news: The service has shown solid growth, according to the AP, adding 1.7 million new subscribers in early 2012, bringing its total subscribers to an impressive 26 million. Revenue was $870 million.

The bad news: It doesn’t expect much growth in the next three months. CEO Reed Hastings said the service may only add 200,000 to 800,000 new subscribers in the second quarter of the year. He believes the company will add a total of 7 million subscribers this year, making it Netflix’s best ever. Still, growth is already slower than last year, when the service added 1.8 million subscribers in its first quarter. 

Though Hastings insists that the slowdown in adoption is a seasonal problem that happens every year, many are worried that Netflix is only beginning to feel the effects of its weakened movie and TV library. This is especially scary since the results only contain one month (of three) where Netflix would have begun feeling the hurt of losing Starz. Competitors like Hulu have also been growing quickly. Hulu announced recently that it has exceeded 2 million subscribers to its Hulu Plus service, and though Amazon hasn’t released any numbers, its Instant Video service is adding new content on a regular basis as well. 

Still, for Netflix to be showing any growth at all is amazing, considering how unpopular the service became a year ago when Hastings attempted to raise prices and then split off the Netflix DVD business as a new company called “Qwikster.” Even we were hunting for alternatives when that debacle was going down. 

In the last couple months, we’ve found Netflix’s selection to be weaker, and we’ve been watching content more on Hulu and other services. While a few new films have been added, most new content seems eclectic. Law and Order: Criminal Intent was added, if you’re into crime procedural dramas, but aside from that we’ve mostly gotten a bunch of music documentaries and one-off oddities. Has Netflix tapped out what original content it can afford?