Movie Audiences: Netflix Breaks Records with New Subscribers

Netflix got 3.3 million new members worldwide in the second quarter of 2015–a company record for the historically weak period.

The company’s net gain of 3.3 million new streaming members, to bring it to 65.6 million total, was nearly double the 1.7 million net adds in the year-ago quarter. Netflix had forecast 2.5 million new subs for Q2 of 2015.

CEO Reed Hastings and CFO David Wells said the higher-than-expected subscriber gains were “fueled by the growing strength of our original programming slate.” During the quarter, Netflix premiered the first seasons of “Marvel’s Daredevil,” “Sense8,” “Dragons: Race to the Edge” and “Grace and Frankie,” as well as season 3 of “Orange is the New Black.”

The execs said U.S. revenue growth also was driven by a 5% year-over-year increase in average selling price, as new subscribers opt for Netflix’s $8.99-per-month two-stream plan.

Netflix’s stock jumped more than 10%. The strong results come after the No. 1 subscription-video provider notched a record 4.9 million net increase worldwide for the first three months of 2015.

Netflix posted revenue of $1.64 billion, an increase of 23% year over year, in line with Wall Street expectations. The company posted earnings of 6 cents per share, versus analyst forecasts of 4 cents. Netflix reported net income of $26.3 million, versus $71.0 million in Q2 2014.

According to the company, almost 90% of Netflix members have watched original content, “another indicator that we are on the right path,” Hastings and Wells said.

Netflix “will devote more investment to originals both in absolute dollars and percentage terms” going forward, including TV series, documentaries and stand-up specials as well as original films, the execs added. Netflix’s global content spending will approach $5 billion in 2016 on a profit/loss basis (representing about $6 billion cash).

In Q2, Netflix spent $1.27 billion on additions to its streaming-content library, up 57% from $813 million in the year-earlier period.

On the earnings call, Hastings said Netflix would want to see regulators require a similar condition on AT&T to not charge content-delivery fees as part of approving its acquisition of DirecTV.

Netflix had objected to Comcast’s previous play for TW Cable on the grounds that the deal would give the No. 1 cable operator too much market power; Netflix has an agreement with Comcast under which it pays the MSO for dedicated Internet connections.