Netflix Adds Record 4.9 Million Subscribers in Q1

Subscription VOD leader ends quarter with 62.3 million subs, cites original series as fueling better-than-expected U.S. growth

Netflix blew past subscriber-growth expectations for the first quarter of 2015, packing on 4.9 million new streaming customers in the period — a record for the company.

The company posted revenue in line with Wall Street’s revenue expectations, with $1.57 billion, but fell short on earnings at a reported 38 cents per share, with Netflix blaming the miss on unfavorable currency-exchange rates; analysts expected 69 cents per share. Netflix shares nevertheless jumped as much as 13% in after-hours trading Wednesday.

Netflix reported a net gain of 2.28 million U.S. subs and 2.6 million overseas, to end Q1 with 62.3 million streaming customers. In January, Netflix told investors it expected to add 4.05 million subscribers in the first quarter, with 1.8 million in the U.S. and 2.25 million internationally.

Netflix attributed the better-than-expected growth for Q1 in the U.S. to its expanding content lineup.

“We think strong U.S. growth benefited from our ever-improving content, including the launch of the third season of ‘House of Cards’ and new shows ‘Unbreakable Kimmy Schmidt’ and ‘Bloodline,'” CEO Reed Hastings and CFO David Wells wrote in a letter to shareholders. Netflix debuted “Marvel’s Daredevil” on April 10, after the end of the first quarter on March 31.

Netflix is forecasting Q2 2015 U.S. net adds of 600,000 — historically a weak period — similar to the year-earlier quarter. Internationally, the company projects adding 1.9 million subs, up 70% from Q2 2014. Netflix is aggressively expanding overseas, having launched in Australia and New Zealand on March 24 following a big push into Europe last fall.

In the first quarter, Netflix customers streamed 10 billion hours of video, which is “more evidence that consumers around the world are embracing the Internet TV revolution,” according to Hastings and Wells.

“Clearly, over the next 20 years, Internet TV is going to replace linear TV,” Hastings said on the company’s call with investors.

As for competition — notably, HBO’s launch of the standalone $15-per-month HBO Now service — Hastings and Wells said: “As we have said in the past, Netflix and HBO are not substitutes for one another given differing content. We think both will continue to be successful in the marketplace, as illustrated by the fact that HBO has continued to grow globally and domestically as we have rapidly grown over the past five years.”

Internet-delivered pay-TV services, like Dish Networks’ Sling TV and Sony’s PlayStation Vue, are “more competitive to the current pay-TV bundle than to Netflix, which is lower cost, has exclusive and original content, and is not focused on live television,” the execs said. They added: “Piracy remains a considerable long-term threat, mostly outside the U.S.”

Netflix said net income for Q1 was depressed by foreign-exchange rates; excluding those losses, Q1 earnings per share would have been 77 cents compared with actual EPS of 38 cents, according to the company.

Earlier Wednesday, Netflix said it picked up “Orange Is the New Black” for a fourth season, to premiere in 2016, and announced eight-part docu-series “Our Planet” — its biggest documentary project to date — from the creators of “Planet Earth,” slated to debut in 2019.

In Q2 2015, Netflix has set debuts for original series including season 3 of “Orange Is The New Black” (June 12); “Grace and Frankie,” starring Jane Fonda and Lily Tomlin (May 8); and “Sense8,” a dramatic thriller from the Wachowski siblings.

Netflix also disclosed plans to roll out an upgraded TV user interface in the second half of 2015. The enhancements “will bring video-playback forward into the browse experience,” Hastings and Wells said. “We are also developing improved ways to promote Netflix originals to our members, using our data to help identify which members would be most likely to enjoy each original title.”

In addition, the Netflix execs noted that it’s seeking shareholder approval for a stock split, which the company outlined in a regulatory filing last week. The proposal is on the table for a vote at the Netflix’s June 9 annual stockholders meeting.

Popular on Variety

More Digital

  • Mission - Impossible - 1996

    Stan Australian Streamer Inks Content Deal With Paramount

    Stan, the Australian streaming video firm owned by Nine Entertainment, has signed a content supply deal with Paramount Pictures. The multi-year agreement adds to Stan’s line up of arrangements with Hollywood suppliers that already includes MGM, Disney, and Lionsgate. Subscription video has taken off hugely in Australia, where there are now an estimated 12.3 million [...]

  • Good Boys Movie

    ‘Good Boys’ Again Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Universal Pictures claims the top spot in spending for the second week in a row with “Good Boys.” Ads placed for the comedy had an estimated media value of $4.42 million through Sunday for [...]

  • Janice Lee

    Asian Streamer Viu Adds Wattpad Development Deal

    Multi-territory Asian video streaming service Viu has struck an original content deal with tech-driven story firm Wattpad. Together they aim to develop film and TV series under the Viu Original label. Canada-based Wattpad hosts a vast library of user-generated stories, with a claimed user base of 80 million, including 22 million in the Asia Pacific [...]

  • Oculus Go Product Shot

    Former Oculus Head of Mobile VR Max Cohen Leaves Facebook

    Early Oculus staffer Max Cohen, who at one point led mobile product for the VR unit, has left Facebook this week, Variety has learned. Cohen’s departure is just the latest staff defection for Facebook’s VR team, which recently also lost its head of VR product, Oculus co-founder Nate Mitchell. A Facebook spokesperson declined to comment. [...]

  • YouTube logo

    YouTube Reportedly to Stop Targeting Ads in Videos for Children

    YouTube is finalizing a plan under which it would no longer serve targeted ads in videos that are popular with kids, Bloomberg reported, citing anonymous sources. The move is intended to appease U.S. regulators that have been investigating whether YouTube violated privacy laws that prohibit online services from collecting data on children, according to the [...]

  • Facebook

    Facebook Looking to Hire Journalists for Curated News Section

    Facebook is looking to assemble a small team of journalists to help curate a news tab within its app. The team of 10 media professionals will complement algorithmic curation, and highlight the top stories of the day, according to a New York Times report. “We are building a new surface for news that will give [...]

  • Best Podcasts: 14 Podcasts You Should

    14 Podcasts You Should Be Listening to

    Here are a few of the informative, funny, thrilling and downright addictive podcasts that deserve your listening attention. Read Variety’s cover story, a deep dive into the podcast revolution with Conan O’Brien, right here. CaliphateThe New York Times Rukmini Callimachi’s reporting about the Islamic State is harrowing boots-on-the-ground journalism at its finest. Conan O’Brien Needs [...]

More From Our Brands

Access exclusive content