House of Cards’ Gamble Pays Off for Netflix
Netflix also said it will introduce a new subscription option that will allow for four simultaneous streams at once, and roll out a personalized profile feature.
During the first quarter, Netflix added 2 million U.S. streaming members for a total of 29 million, according to a Monday note to shareholders from CEO Reed Hastings and CFO David Wells. The DVD business continues to shrink and now stands at 8 million. International streaming membership grew by more than 1 million to 7.1 million, and collectively, users watched more than 4 billion hours of movies and TV shows.
Netflix said it plans to launch in a new European market in the second half of 2013, and promised more details during its July earnings call.
Back at CES, Netflix said it was testing out personalized profiles, which let each member of a household manage their own viewing and receive customized recommendations based on their viewing habits. At the time, Netflix said it did not know if the feature would ever be released, but the company announced today that "we expect to roll out profiles globally in the coming months."
Meanwhile, Netflix said it will add a 4-stream plan for $11.99 per month in the U.S. "shortly." At this point, only two people can watch separate streams per account, but the 4-stream option will allow for up to four simultaneous streams on one account. Netflix, however, expects that fewer than 1 percent of its customers will take advantage of the feature.
Netflix touted its content deals during the quarter, including those with Turner Broadcasting and Warner Bros. TV group. The Warner deal, in particular, "illustrates our evolution to a curator of select programming," Netflix said, meaning the service will ditch programming that is not popular with viewers, much like a network.
Judge Dismisses Shareholder Suit Against Netflix
The class-action suit, filed by the City of Royal Oak Retirement System in California district court in January 2012, alleged that Netflix "issued materially false and misleading statements regarding [its] business practices and its contracts with content providers. "Specifically, defendants concealed negative trends in Netflix's business," the plaintiffs claimed.
The suit drew attention to Netflix pricing changes and attempted to draw a connection between the company's alleged financial misbehavior and the sale of stock by Netflix CEO Reed Hastings and others. The plaintiffs claimed that Netflix raised prices without keeping shareholders in the loop when it faced the expiration of contracts with content providers that would be expensive for the company to renew.
But U.S. District Judge Samuel Conti said Wednesday that the plaintiffs "failed to show that Netflix materially misled them about its accounting, its pricing trends, the relative profitability of its streaming and DVD businesses, and its dealings with U.S. securities regulators," Reuters reported.
Judge Conti "also said Hastings did not materially mislead investors in a conference call on Dec. 8, 2010, when he said Netflix would benefit from a 'virtuous cycle' where it could add subscribers and streaming content while lessening its DVD-by-mail costs," according to the news service.
Netflix Gets Boost With 2 Million New Subscribers
Netflix added more than 2 million streaming subscribers during the fourth quarter for a total of 27 million users in the U.S.
In a Wednesday letter to shareholders, CEO Reed Hastings and CFO David Wells said Netflix's "holiday season was particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs."
The DVD side of the business continued to decline, but at a slower rate than Netflix expected. At this point, Netflix has 8.2 million DVD subscribers.
Streaming is the future of Netflix, though, and the company touted the content deals it negotiated in the fourth quarter, including the lucrative Disney deal that will kick off in 2016 and the more recent Warner Bros. deal, which will bring shows like NBC's Revolution and Fox'sThe Following to Netflix Watch Instantly.
"When it comes to highly serialized TV series, Netflix offers an amazingly better experience than any other alternative as members can start right from season one, episode one, and watch episodes how and when they feel like it," Hastings and Wells said.
The company will embrace that model with its original programming, the next of which debuts on Feb. 1 with House of Cards. Netflix also has theArrested Development reboot in May, Hemlock Grove on April 19, and three other shows this year.
Netflix Shows Off Personalized Profiles
LAS VEGAS–Netflix is now testing personalized profiles for users of its streaming service, which will let each member of a household receive customized recommendations based on their viewing habits.
With separate profiles, Netflix can serve up Downton Abbey to Mom and Storage Wars to Dad. For kids under 12, parents can set their profiles to only offer content from Netflix's Just for Kids service so your 8-year-old doesn't accidentally start watching Breaking Bad.
In a demo here at CES, Netflix spokesman Joris Evers stressed that the Profiles feature is only in the testing phase. It's being rolled out to "tens of thousands" of current Netflix users, but if they don't use or like it, Netflix won't roll it out completely, he said.
How will Netflix know if Profiles are a success? If it leads to customers watching more content, Evers said. If Profiles does not inspire increased viewing, however, they "may never" be released to all members, he said.
Testing on Profiles started a few weeks ago in the U.S. and abroad, and will pop up on the iPad, PlayStation 3, and the Web. Evers showed off Profiles here on a PS3, which included a "Profiles" button on the top right of the main menu screen, along with a cartoon icon for the current profile selection. Select the Profiles button and a pop-up window will give you the option to switch to another profile. See the slideshow for more.
Evers said Netflix is also testing the option of letting international users add films to an Instant Queue, so they can come back and watch later. Queues have been a familiar site for U.S. users thanks to Netflix's DVD service, and Netflix incorporated the queue concept into Watch Instantly when it first launched streaming. But overseas, Netflix users only have a streaming option - and no Instant Queue. That might change soon, but again, it will depend on the feedback Netflix receives during testing.
Amazon Blames Deleted Data for Christmas Eve Netflix Outage
Amazon on Monday offered a detailed explanation of a Christmas Eve outage that took down the services of clients like Netflix.
In a nutshell, a developer accidentally deleted some data from the Amazon Elastic Load Balancing Service (ELB). It took Amazon some time to figure that out, and when it did, an initial recovery effort failed, prolonging the Netflix outage.
"We want to apologize," Amazon said in a note posted on its AWS website. "We know how critical our services are to our customers' businesses, and we know this disruption came at an inopportune time for some of our customers. We will do everything we can to learn from this event and use it to drive further improvement in the ELB service."
Netflix users started reporting problems with the service's Watch Instantly service on the afternoon of Dec. 24 - meaning many people couldn't try out Netflix on their new gadgets, or avoid family members with whom they did not want to interact. The partial outage affected "some, but not all devices that can stream from Netflix," the company said at the time. Service was restored by Tuesday morning.
Alas, it appears the downtime was the result of human error. According to Amazon's calculations, a developer deleted a portion of ELB data at 12:24 p.m. Pacific on Dec. 24.
Christmas Eve Netflix Outage Forces Families to Socially Interact
Christmas is a time for family, eggnog, unwrapping gifts … and apparantly, streaming movies.
Not this year, though, thanks to an outage at Amazon's Virginia data centers.
According to Wired, Netflix's streaming video service began to falter around 3:30 p.m. Eastern on Monday, when customers began reporting the outage. Later that night, the company said on Twitter that the partial outage affected "some, but not all devices that can stream from Netflix."
"We're aware the some members are experiencing issues streaming movies and TV shows," the @Netflixhelps Twitter account wrote Monday afternoon. "We're working to resolve the problem," which seemed to affect certain users in only the U.S., Canada, and Latin America.
Offering tips like visiting the "Cannot Connect to Netflix" support page, the team manned its Twitter feed constantly throughout Tuesday, responding directly to many members and offering apologies for the service disruption— even in Spanish.
A true Christmas miracle, service was restored by Tuesday morning, according to the Netflix Twitter feed.
"Special thanks to our awesome members for being patient. We're back to normal streaming levels. We hope everyone has a great holiday," a Dec. 25 message said.
Netflix CEO in Hot Water With SEC Over Facebook Post
Netflix CEO Reed Hastings is in hot water with securities regulators - thanks to a Facebook post.
The Securities and Exchange Commission (SEC) informed Hastings and his company Wednesday that it may bring civil action following a social network message that allegedly violated public disclosure rules.
On July 3, Hastings posted on the company's public Facebook account that said "Netflix monthly viewing exceeded 1 billion hours for the first time ever in June." The post is still live, but does not show up on Hasting's Timeline.
This week, the Netflix chief took to the very same page to defend his actions.
"SEC staff questions a Facebook post," he wrote early Thursday morning. "Fascinating social media story."
The Netflix chief acknowledged his early July posting, pointing to the resulting press coverage, as many reporters and bloggers are among the page's followers. Some users re-posted Hastings's message, but the company never issued a press release or filed an 8-K about the milestone. Hastings did the same thing a month earlier, he said, when noting on Facebook in June that Netflix has reached "nearly a billion hours per month."
PS3 Is Most Popular Netflix Streaming Device
Netflix and Sony announced today that the PlayStation 3 is now the most popular Netflix streaming device.
"PS3 is our largest TV-connected platform in terms of Netflix viewing, and this year, at times, even surpassed the PC in hours of Netflix enjoyment to become our No. 1 platform overall," Netflix CEO Reed Hastings said in a statement.
Hastings touted the ability to update the Netflix app with new features on a daily basis, as well as the ability for users to sign up for Netflix directly from the PS3.
Netflix started streaming content to the PS3 in late 2009. Initially, users had to insert a special disc into the console in order to access Netflix Watch Instantly, but Sony fixed that by Oct. 2010. Earlier this year, Netflix was added to the PlayStation Vita, allowing users to start watching something on the handheld and pick up on the PS3.
Sony and Netflix did not elaborate on exactly how many hours streaming customers are consuming versus other devices. Netflix is also available on the Nintendo Wii and Xbox 360, as well as a variety of Blu-ray players, HDTVs, streaming media players, home theater systems, phones, and tablets.
Netflix Dominates North American Streaming
Despite its troubles last year amidst a price hike, Netflix has seemingly rebounded, and users are tapping into the company's streaming video service now more than ever, according to new stats.
Netflix dominates Internet video streaming in North America, according to report from Sandvine. During peak periods, Netflix makes up 33 percent of downstream traffic, which is up from 32 percent in October 2011.
"Audio and video streaming account for 65 percent of all downstream traffic from 9pm-12am and half of that is Netflix traffic [on North America fixed networks]," said Dave Caputo, CEO of Sandvine, in a statement.
Amazon streaming, meanwhile, makes up 1.8 percent of downstream traffic, followed by Hulu at 1.4 percent, and HBO GO at 0.5 percent.
In Europe, YouTube dominates peak downstream traffic at 20 percent, Sandvine said. Netflix launched in the U.K. and Ireland in January, but faces competition there from Sky's streaming service, as well as Amazon's LoveFilm and YouView.
Sandvine also looked at file sharing and found that BitTorrent has a healthy share of the audience in Europe at 16 percent and about 12 percent in North America. In Asia-Pacific, however, that number jumps to 36 percent, which Sandvine attributed to the lack of attractive over-the-top video services.