In a move that bodes well forNetflix as it gears up to deliver quarterly results next week, the leading premium video service tweeted that it served up 10 billion hours of content during the quarter.
We might not be able to extrapolate the missive into actual subscriber counts and revenue figures, but it's probably a strong indicator that Netflix users stuck around during the first three months of the year.
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It's hard to blame them. Netflix unleashed the third season of House of Cards in February, following that up a week later in March with the Tina Fey-backedUnbreakable Kimmy Schmidt. Another serialized drama -- Bloodline -- hit Netflix as an exclusive two weeks later. Throw in this Friday's premiere of the heavily hyped Daredevil, and you have the perfect recipe for keeping customers close.
What does 10 billion hours of viewed content represent, beyond a lot of House of Cards? Well, we can reflect back to Netflix CEO Reed Hastings bragging about the service cranking out more than 4 billion hours of views during the first three months of 2013. Netflix delivered a 150% pop during the same quarter two years later, but that doesn't mean that its subscriber base has grown that quickly.
In fact, Netflix had 36.3 million streaming subscribers worldwide during the first quarter of 2013. It began this year with 57.4 million users, and in January it was expecting to add a little more than 4 million net new streaming accounts by the end of March. In other words, usage might have soared 150% over two years, but its actual base of streaming subscribers has only risen by 69% to a projected 61.4 million.
This is pretty spectacular news. It means the average user is streaming a lot more Netflix than before, making it a better value. Yes, Netflix was tripped up last year by its $1 springtime price hike for new members. That isn't going to happen this time with Netflix streaming cemented at $8.99 a month for now. It also helped its own luck by ramping up the volume of original content. Last year it didn't fare as well as it had hoped in the gap between the second seasons of House of Cards and Orange Is the New Black. It is now well armed in that department if we go by the well-reviewed shows that have hit the vault in recent weeks.
The seemingly throwaway remark about topping 10 billion hours of content viewed is huge. It puts shareholders ahead of the April 15 quarterly report in a win-win situation. Netflix will either easily top its target for 61.4 million users or it has become so addictive that folks don't want to quit. In reality it will probably succeed on both of those fronts.
Plenty of factors will dictate how all of this viewing breaks down into revenue and profitability. We will have to wait until next week for that. However, if people suspect video buffs are tiring of Netflix as we enter the cutthroat age of HBO Now, Sling TV, and other premium streaming platforms, that one tweet should silence the skeptics.
The article 10 Billion Reasons to Buy Netflix Inc. originally appeared on Fool.com.
Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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