Netflix added 4.0 million new customers in the first quarter, slightly more than expected, for a total 48.35 million streaming subscribers at the end of March. Its base rose by 2.25 million in the US to 35.67 million and increased by 1.76 million abroad to 12.68 million. The company passed USD 1 billion in streaming revenue in the quarter, up from USD 781 million a year earlier, and operating profit jumped to USD 98 million from USD 32 million a year ago.
Net profit of USD 53 million or 86 cents a share was better than its outlook for stable profits versus Q4. Netflix warned that it expects US subscriber additions to slow in Q2 due to seasonality, while profits and cash flow will come under pressure in the second half from planned further expansion abroad and investments in original content.
It plans a price increase of USD 1-2 per month for new customers in select countries to help offset the additional content costs. The company also announced plans to start launching on provider set-top boxes in the US, starting first with Tivo boxes. The company's forecast for Q2 is USD 1.139 billion in streaming revenue, net profit of USD 69 million and EPS of USD 1.12.
In addition, Netflix added fresh fire to its campaign for net neutrality. In its Q1 report, the company came out against Comcast's proposed takeover of Time Warner Cable, saying it would increase Comcast's dominance in the broadband market and the cable operator's ability to charge for peering. Internet performance for Comcast customers has improved since it signed a peering agreement, but Netflix singled out a new company that needs to improve its broadband: AT&T U-verse. Netflix said U-verse often offers a worse performance than DSL, and AT&T should take advantage of free interconnection with Netflix to improves this.
