Lawrence Meyers: The earnings report from Netflix (NASDAQ:NFLX) came as a bit of a surprise to myself and a few other investors, as top line numbers were impressive.
Yet overall earnings and cash flow remain unimpressive.
The overall Netflix earnings report was pretty impressive.
U.S. streaming video subscribers increased by 2.25 million to 35.7 million.
Meanwhile, international membership grew by 1.75 million to a total of 12.7 million, and now represents 25% of the company’s total streaming revenue.
The DVD business continues to slowly die out, with 6.65 million active memberships, down from 7.98 million one year ago.
Those results were enough to send Netflix shares jumping $25 or 7% following Monday’s earnings announcement.
In addition to the Netflix earnings report, the company also revealed some interesting news.
Netflix is raising its prices.
The company’s current streaming video service costs $7.99 per month.
And the price hasn’t been changed since 2010 when Netflix first introduced streaming video.
The company will raise rates by $1 or $2 per month for new subscribers.
And eventually, existing subscribers will be expected to pay more too.
The simple fact is that Netflix has been making huge investment in content.
With original programming of House of Cards costing $100 million, Netflix is attempting to be the Internet’s premier provider of video content.
Historically, Netflix has made a lot more money from its DVD rental business than streaming video.
DVD contribution profit was $97 million in the first quarter, meaning each subscriber was worth about $14.66.