Netflix adds 4.33 million subscribers, shares soar by 13%

Netflix added 4.33 million subscribers in its fourth quarter, ahead of its prediction of 4 million new subscribers. It now boasts a total of 57.4 million subscribers worldwide.

The video streaming company expects to add 4 million more subscribers this quarter, which would ramp up its total number of subscribers to 61.4 million.

Netflix posted net income for the quarter of $83 million ($1.35 per share), up from $43 million (79 cents per share) the year before. Its income figures were much higher than Wall Street estimates of 45 cents per share.

Revenue increased to $1.48 billion, up from $1.17 billion the previous year.

Shares of the streaming video company surged by 13%, to $394.27 in after-hours trading on Tuesday, after the impressive quarterly figures were posted. Shares of Netflix have gained 1.7% over the past year.

CEO Reed Hastings in a letter to shareholders:

“We’ve found our growth in net adds is strongest in the lower income areas of the US, which would not be the case if there was material price sensitivity. Additionally, we implemented a similar price change in Mexico during Q4, and saw no detectable change in net additions.”

Netflix will continue to expand its original programming, noting that it is cheaper than licensing content. The company said it will produce 320 hours of original programming in 2015 – triple the amount produced last year.

“Last year our original content overall was some of our most efficient content,” said Hastings.

“We believe there is big growth ahead in the U.S. market for Netflix,” said Hastings. “We’ll continue to improve our content, our marketing and our service, to eventually achieve ‘must have’ status in most households.”

“In late Q1, we’ll be launching Netflix in Australia and New Zealand. There are numerous local competitors and a thirst for movies and TV shows from around the world. Later in the year, we’ll launch additional major countries, in keeping with our **global strategy.”

** A global strategy is a plan that a business pursues when it wishes to expand in the global market.

Increasing competition in the market

There is increasing competition in the video streaming market, with Amazon aggressively pushing its Prime video service to compete directly with Netflix. Amazon took home two Golden Globe awards for its exclusive TV series called “Transparent”.

HBO has also announced that it is working on a standalone streaming service that will launch this year.

S&P Capital IQ analyst Tuna Amobi, told Forbes:

“Looking ahead, we think ’15 could portend another eventful year amid intensifying competition in streaming video,”

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