Netflix's good week: Subscribers, stock, swagger up

The company had a pretty good week — its stock was up, and so are its number of subscribers — so let’s tune into Netflix news:

• First, some trash talking, courtesy of Netflix CEO Reed Hastings. When told this week by an analyst that HBO co-president Richard Plepler supposedly didn’t care that some HBO Go users were sharing their passwords with others, Hastings said: “So I guess Plepler doesn’t mind me then sharing his [Netflix] account information. So it’s plepler@hbo.com and his password is ‘netflix b*tch.’ ”

What’s that all about? Well, Netflix is testing cracking down on password sharing, because it’s a no-brainer that if  a user gives her login and password to her mom, brother and three best friends, the company loses out on potential subscribers. So the company is introducing tiered pricing, which would charge customers based on how many streams they’d like to be able to view at once. It hasn’t disclosed the details, but in its shareholders letter this week, Netflix did say existing members would get “generous grandfathering” of their current plans, and that it’s in no hurry to roll out tiered pricing to new members.

• Speaking of HBO, by the way, it disputes an NPD Group report this week that said premium cable TV networks were losing subscribers while Netflix’s numbers are rising. The NPD survey said subscriptions to premium cable networks declined 6 percent from March 2012 to August 2013, and that Netflix and similar services saw a 4 percent rise in subscriptions over the same period. Variety reports that HBO, Starz and Showtime said NPD’s numbers, which are based on a consumer survey, are inaccurate compared to their numbers, which are based on industry sources.

• Last but not least, Netflix’s earnings, which the Los Gatos company reported Wednesday. They were good. (The company’s quarterly profit was about six times higher than the year-ago quarter: $48 million, or 79 cents a share, compared to $8 million, or 13 cents a share. The average analysts estimate was about 67 cents a share.) And the subscribers — those numbers were good, too: 2.3 million additional subscribers in the United States, and the company said it expects to gain 2.25 million more during the first three months of 2014. All that, plus the possibility of making more money once it introduces tiered pricing, propelled Netflix stock to a record high Thursday, soaring 16 percent to $388.72. (Amid a big sell-off on the markets today, Netflix shares are doing way better than other tech stocks; they’re off about 0.3 percent as of this post.)

Oh, and about net neutrality, which was dealt a big blow after a federal appeals court ruling a couple of weeks ago? Netflix doesn’t seem to be sweating it, at least according to its shareholder letter. The company called the possibility that ISPs would charge companies such as Netflix fees to deliver their services a “draconian scenario,” but said it was likely that Internet service providers would “avoid this consumer-unfriendly path of discrimination.” If not, Netflix said, it “would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.”

 

Photo of Netflix headquarters in Los Gatos by Justin Sullivan/Getty Images

Levi Sumagaysay Levi Sumagaysay (3878 Posts)

Levi Sumagaysay is editor of the combined SiliconBeat and Good Morning Silicon Valley. She also helps take care of SiliconValley.com, the Mercury News tech website. Email: lsumagaysay (at) bayareanewsgroup (dot-com).