Netflix prepares new European launch

Netflix will launch in an additional European market in the second half of this year, as solid subscriber growth and strong earnings saw the company’s share price jump 25% after hours.

Announcing its Q1 earnings, the firm said it would announce more details about its next European deployment in July, as total US streaming customers climbed by 2.03 million users in the quarter, to 29.17 million. This compares to 23.41 million the same time last year.

Internationally, the US-based video firm added an additional 1.02 million streaming customers in the quarter, taking this figure to 7.14million – up from 3.07 million a year earlier. Netflix said international users now account for 14% of global revenue.

The firm also hailed the success of its big-budget original series House of Cards, which it debuted in February. Though Netflix did not reveal viewing figures, in a letter to shareholders, it said that “global viewing and high level of engagement with the show increased our confidence in our ability to pick shows Netflix members will embrace and to pick partners skilled at delivering a great series.”

Its production slate for the rest of the year includes: a new series of cult comedy Arrested Development, which will launch in May; prison drama Orange is the New Black; and season two of Lilyhammer.

“We’ve seen improvements in our business over the last year in content, in our product, in optimising the way we process payments, and in the general recovery of our brand. All of these improvements contribute to higher member satisfaction, which we see in higher year-over-year levels for members’ likelihood to recommend our service,” Netflix CEO Reed Hastings and CFO David Wells said in the letter to shareholders.

“In all of our markets, we saw growth and improved profits or reduced losses. International contribution losses improved $28 million sequentially, better than expected due primarily to less growth in content spending than forecast,” they added, claiming that in Q2 Netflix plans to increase international content spend in line with revenue growth.

Overall for the quarter, revenue reached US$1 billion, while net income came in at US$3 million, compared to a US$5 million loss for the same period last year. Looking ahead, the firm predicted net income would remain “roughly flat” in Q2. It added that it ended the quarter with “a little over $1 billion in cash and equivalents,” reserves that will allow it “the flexibility to invest in additional Originals.”

Netflix will also let its programming deal with Viacom – often attributed as a key reason for Nickelodeon’s ratings dip in recent years – come to an end but will attempt to hold onto some series from the likes of MTV, Comedy Central and Nick. “We are in discussions with them about licensing particular shows but have yet to conclude a deal,” Hastings wrote.