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Netflix Q2 Revenue Up 27%

Netflix released its Q2 numbers on Wednesday, and while the company demonstrated continued growth in both its net income and subscriber base, its stock still plunged nearly 9% in after-hours trading.
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Netflix revealed $520 million in revenue for second quarter of 2010, an increase of 27% over Q2 of 2009 but still at the lower end of investors’ expectations. Netflix also saw its net income rise 34% and added one million subscribers.

Netflix president Reed Hastings said that the company will make investing its profits into expanding its streaming catalog a top priority. Discussing the recent deal Netflix made with Relativity Media, Hastings said the following:

“Exclusives … are a core part of the pay-TV market into which we are growing . . . At this point we can start to afford some major TV shows and movies on an exclusive basis and plan going forward on a mix of more-expensive content and lower-cost non-exclusive content . . . If we find enough content deals where the terms make sense to us, we’ll be spending lots more on streaming content .
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. . Otherwise, we can spend more on marketing.”

Hastings also cautioned that Netflix will likely not sustain the rapid growth that it has been enjoying in recent quarters, saying:

“This kind of rapid acceleration is unlikely to continue for long.”

Will Netflix’s torrid pace of growth indeed slow down as the year wanes? With Redbox parent Coinstar set to announce its Q2 financials on the 29th, it will be interesting to see how Redbox’s numbers stack up with Netflix’s. Leave your predictions in the comments.

(via The L.A. Times)

2 Responses to “Netflix Q2 Revenue Up 27%”

  1. Visitor [Join Now]
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    From the conference call analyst Q&A:

    Erin Kasenchak asks:

    What are the top two places that people go when they churn?

    Reed Hastings replies:

    You know when we ask them, it’s a little bit of choppy exactly because you ask about movies, where did you get movies from? This is going to be different answer than where you get TV shows from. But when you ask where we get movies from, consumers say that kiosk, the $1 rental. That’s the big one and is still rising. Almost everything else is in the noise

    Redbox is eating Netflix’s lunch. A lot of people are downgrading or canceling and going w/kiosks.