Netflix Recovers Subscribers, Will Back Out of DVD Business

Jan 26, 2012

Netflix reported earnings of $41 million for 4Q 2011, or $0.73 per share, which is better than analysts expected the company to do after its difficult run in 3Q. Netflix's revenue rose 43% to $876 million, but overall, profits were down 13%.

Netflix also recovered much of its lost subscriber count, matching a loss of nearly 800,000 subscribers with the addition of 610,000 new members in 4Q. Its total customer base currently stands at 24.4 million, the vast majority of which (21.7 million) are subscribers to the streaming service, which contributed $52 million in profit in the 4Q on margins of 10.9%.

However, DVD subscriptions have plummeted: Netflix lost nearly 2.8 million customers of its DVD service in 4Q. CEO Reed Hastings expects the numbers to continue to decline, but Netflix is not planning any specific retention efforts, he said, nor will it continue to market the service. DVD rentals still accounted for $370 million in revenue for the period and contributed $194 million in profit on a 52.4% margin.