Netflix: more customers with less money
Posted
Jul 25 2008, 12:56 PM
by
Kim Peterson
Rating:
Netflix shares are up 3% today after reporting a decent quarter that beat what analysts had been expecting. One tidbit I found interesting was that the company truly did manage to do more with less -- getting more subscribers even after cutting its marketing budget by 11%.
Netflix signed 168,000 new customers in the quarter for a total of 8.4 million. And that's after cutting marketing by $5 million. A year ago, the company lost 55,000 customers during the quarter. Netflix doesn't get all the credit; rival Blockbuster has backed away from pushing its online rental service lately, giving Netflix a bit of a free ride.
Netflix also got a generous amount of free marketing during the quarter with all the buzz over its $100 set-top player, called the Netflix Player by Roku.
CEO Reed Hastings said the company appears to be "substantially unaffected by the negative economic climate." Or, maybe the economy is helping a bit. A $20 Netflix subscription is a nice alternative for people cutting back on pricey cable packages or trips to the movie theater.
Still, the boost in customers didn't inspire Netflix to up its guidance for the rest of the year. The company still expects its base to increase to between 9.1 million and 9.7 million subscribers.
Maybe that's because Blockbuster is poised to go after Netflix once again. Blockbuster has just hired a new chief marketing officer and is working the kinks out of its Movielink online rental service, which it's expected to relaunch next month.
Related reading:
Netflix 2Q profit up 4 pct, beats analyst views
Netflix's hot new video player
Netflix: By-mail business to peak in five years
Blockbuster's set-top box plans
