LOS GATOS, CA – Netflix has done so well since its launch in Canada four months ago that it is planning to expand in to a second international market later this year.
In a letter to shareholders earlier this week detailing the company’s Q4 financial results, Netflix CEO Reed Hastings described the company’s Canadian results as “excellent”, and predicted that the service will have between 750,000 and 900,000 Canadian subscribers by the end of March, 2011.
While Netflix declined to specifically break out the current number of Canadian customers, it did report 3.08 million new subscribers overall in its fourth quarter ended December 31, 2010. That brings its total base to 20.01 million, making it the third-largest video subscription service in the U.S. behind only Comcast and DirecTV.
“To summarize Q4, we would say that our huge subscriber growth, fueled by the excitement of watching instantly, impressed even us”, Hastings wrote. “More subscriber growth enables us to spend more on streaming content, making the Netflix service even better in 2011”.
The web-based video streaming provider posted fourth quarter earnings of US$47.1 million, up from $30.9 million in the same period a year ago, while revenue rose to $596 million from $445 million.
Hastings said that the company is “significantly increasing our available content in Canada” and anticipates being profitable on a run-rate basis in Q3 of this year.
“We target each specific territory to achieve a positive operating margin within two years of launch, and in Canada we expect to achieve that in one year or less from launch”, he continued. “Assuming that Canada continues to perform well for us, we will expand into an additional market in the second half of this year. After launch, if we gain confidence in this second international market getting to profitability in less than eight quarters, with substantial profitability after that, then we will continue to expand and invest aggressively in 2012 around the globe.”
Hastings also said that the company plans to establish personal, rather than household accounts, and is working on an integration with Facebook.
In a post on the company’s blog the following day, Netflix offered a ranking of its top Canadian and U.S. ISP networks to spotlight which providers are capable of handling its HD streams. Rogers was tops with a 3.02 Mbps average, followed closely by Shaw, while Bell placed third and Telus ranked last. In the U.S., Charter and Comcast held the top two spots.
