NPR Story
12:56 pm
Tue October 22, 2013

Netflix Reaches New Heights With 40 Million Subscribers

Originally published on Tue October 22, 2013 2:51 pm

Netflix is riding on the success of streaming original television programs, such as “Orange is the New Black” and “House of Cards.”

The company now has 40 million worldwide subscribers, and its stock has tripled this year. Netflix reported revenue of $1.11 billion in the third quarter.


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And Netflix is flying. The online streaming entertainment company announced that it now has 40 million streaming subscribers, up from 29.4 million at this time last year. Its third quarter stock results rose more than 11 percent to $383.94 a share, and the company has a revenue of more than $1 billion. But must what goes up come down?

Jason Bellini of The Wall Street Journal joins us. And first of all, Jason, how much of this success is due to Netflix's offering of this original TV programming "Orange is the New Black" and others?

JASON BELLINI: Hi, Robin. Well, you know, yesterday was a huge milestone for Netflix, because their paid subscriber base is now ahead of HBO. It's a big deal, and mostly attributed to, by many people, "Orange is the New Black" and "House of Cards" - "House of Cards" winning an Emmy. So Netflix's CEO, Reed Hastings, said in a call yesterday, we're going to try to do more great content, giving the example of "Orange" as the future way to build up their membership.

And, you know, another factor is being the company's exclusive offerings of TV shows, such as AMC's "Breaking Bad," Fox's "New Girl." And as a result, they've seen membership jump 33 percent from a year ago.

YOUNG: Wow. Well - and Netflix mails out DVDs and streams - as well as streaming this video on demand. Consumers got upset a few years ago when the company seemed to be trying to phase out the DVDs. The customer base shrunk, stocks tanked. But it's taking off, not because of DVDs, because of this streaming site. Is it just - the original programming- and you mentioned, you know, "Breaking Bad" - but is it just this kind of programming?

BELLINI: Well, that's a big part of it. And I think that there's a lot of investors who see a great future now for Netflix, where at other times, there was much more skepticism. And that's based on people adopting the model of watching streaming video and being able to get it through fast connections to the Internet. And, you know, the company is really banking on trying to get onto more platforms in the future. They're negotiating with large cable providers to try to become an app that becomes even more seamless for people to access their services through streaming. Yes, streaming is where it's at.

YOUNG: Yeah. But they have competition from other subscription companies, don't they? Hulu, Amazon?

BELLINI: Hulu, Amazon, that's right. You know, Hulu has been, you know, under a lot of uncertainty about their future, but they struck a deal to acquire 2,000 episodes of BBC's "North America." Yet, Hulu itself has a lot less money to work with to make acquisitions.

So, you know, the other major competition, though, is Amazon. They're arguably much more of a threat because of their streaming business. And they're going out, they're making their own original series. They're also licensing a lot of content from traditional entertainment companies. On Tuesday, for instance, they just announced an expanded licensing deal with MGM. So, yeah, there's a lot of - you know, there's a lot of competition, particularly from Amazon right now.

YOUNG: Jason, in the minute we have, just a quick question, here. I know that there are people listening saying, jeez, I still haven't figured out Netflix. Are we headed for a bifurcated country, where there are some people still watching their three-network TV channels at home, and everybody else is watching Netflix, you know, on their computer?

BELLINI: It's an interesting question, and it's one that the cable operators have been fretting about for years, that people are going to - that there are going to be a large portion of people - especially young people - who migrate to just streaming, the so-called cord-cutters. And the way they're preparing for that, the cable companies, is by getting into the business of being broadband providers, not just content, not just cable channel providers. So streaming is the future, but there's still going to be a lot of people who just sort of hang onto the traditional linear television. But future, we'll all eventually be streaming, one way or another.

YOUNG: Until they peel the hands. Jason Bellini, a business reporter for The Wall Street Journal. He joins us every week at HERE AND NOW. Jason, thanks so much.

BELLINI: Thank you.
