Co. ends qtr. with 857,000 subs, revs of $45.2 million
Netflix, the 4-year-old online DVD service, trimmed its net loss and bulked up on subscribers as it continued to prove the viability of its overnight DVD mail order rental service.
Announcing fourth quarter and full year 2002 results, the company said it finished the year with 857,000 subscribers and revenues of $45.2 million for the quarter, the latter a 109% jump on the same period the previous year. Company managed positive cash flow of $4.7 million in the fourth quarter and $15.8 million for the fiscal year off total 2002 sales of $152.8 million. Netflix nevertheless reported a GAAP net loss of $2.3 million for the quarter.
Looking at the year ahead, the company projects it could top 1 million subs by the end of the first quarter, with full-year sales of $235 million-$255 million.
Though small, Netflix has bullied its way into the vid rental biz, and many suspect it is taking an increasing share of traditional retail rental business from megachains like Blockbuster.
Company chief financial officer Barry McCarthy believes the service is expanding rather than eating into the brick-and-mortar video biz. More interestingly, he told Daily Variety that unlike retail chains, where 90% of the rental biz is hit-driven, some 70% of Netflix rentals are back catalog, a trend that has persisted even as the service’s sub profile has evolved, with mainstream users joining early-adopter film buffs.
Earlier this week, the online mail-order shop upped two acquisition execs to oversee its various distribution agreements with studios and indie suppliers. Cindy Holland was named director of content acquisition, responsible for revenue sharing deals, while Jeffrey Briller joined as senior DVD purchasing manager.
Both execs are also charged with securing “critically acclaimed, undistributed content” under Netflix’s “Unique Content Initiative.” Netflix says it is often the initial digital distributor for a title, providing the artists and studios a powerful new release channel and giving viewers greater access to a variety of films.
DVD rental service provides its 850,000 members a library of 13,500 DVD titles. Each subscriber pays a flat $19.95 per month for unlimited rentals (up to three movies at a time). DVDs are delivered via first-class mail from more than a dozen distribution centers. There are no due dates and no late fees, and 50% of its members get overnight delivery.