Netflix raises prices for US subscribers

Netflix Inc is raising monthly fees for its US subscribers by between 13 percent and 18 percent, the video streaming pioneer's first price increase since 2017 as it spends heavily on original content and international expansion.

Prices for its popular standard plan, which allows streaming on 2 devices at the same time, will rise to $12.99 per month from $10.99, the company said in a statement.

Netflix shares rose 6.5 percent to close at $354.64, adding to their 30 percent rise so far this year.

The company's top-tier plan, which allows streaming on four screens in high definition, will increase to $15.99 from $13.99 per month, while the fee for its basic plan will rise to $8.99 from $7.99.

In comparison, AT&T Inc's HBO Now streaming service charges $14.99 per month, while Hulu's no-advertisements plan is priced at $11.99 per month.

"It highlights that Netflix has pricing power and even after the increase it remains a very cheap entertainment alternative," Pivotal Research Group analyst Jeff Wlodarczak said.

Netflix has been spending billions to bolster its original content, which boasts award-winning shows such as "The Crown," "Black Mirror" and "Wild Wild Country" to fend off intensifying competition from players such as Amazon.com's Prime Video service and Hulu. The company reported it had 137 million customers at the end of September.

The price hikes are expected to fetch Netflix hundreds of millions of dollars, ahead of the launch of streaming services from AT&T and Walt Disney Co.

While aggressive spending - a planned $8 billion in 2018 - has led to a surge in subscriber growth, its debt doubled to $6.50 billion in 2017 from $3.36 billion in 2016.

The company is expected to have a debt level of $8.33 billion in 2018, according to Daniel Morgan, senior portfolio manager at Synovus Trust Co, which owns 15,019 shares of Netflix.

Netflix is scheduled to report its fourth-quarter results after market close on Thursday.

"With Netflix frequently tapping the debt markets on several recent occasions, the price hike could help ease concerns with a growing deficit on free cash flow to fund a likely continued escalation in Netflix's content spending, which likely topped $13 billion in 2018," CFRA analyst Tuna Amobi said.

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Netflix crosses $100 billion market cap as subscribers surge

Netflix Inc snagged 2 million more subscribers than Wall Street expected in the final three months of 2017, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.

The results drove Netflix to a market capitalization of more than $100 billion for the first time. Shares jumped 9 percent to over $248 in after-hours trading on Monday after rallying throughout the month and rising 53 percent last year.

The company has signed up more than half of all US broadband households and is building its customer base in 190 countries by spending billions on programming.

Netflix picked up 6.36 million subscribers in international markets from October through December, when it released new seasons of critically acclaimed shows "Stranger Things" and "The Crown" as well as Will Smith action movie "Bright." That topped Wall Street expectations of 5.1 million, according to FactSet.

Along with 1.98 million customer additions in the United States, the company ended the year with 117.58 million streaming subscribers around the globe, despite a price hike in October.

"Netflix is pouring more and more money into making content, and it is directly translating into more subscribers," BTIG analyst Richard Greenfield said. "They see a huge opportunity and they are moving as fast as they can to attack it."

The company also said it took a $39 million non-cash charge for "unreleased content we’ve decided not to move forward with." A source familiar with the matter said the charge was related to content starring Kevin Spacey, with whom Netflix cut ties after he was accused of sexual misconduct.

Netflix temporarily halted production of "House of Cards" to write out Spacey's character and decided not to release the film "Gore," which starred Spacey as Gore Vidal.

Spacey has apologized to one of his accusers, and according to his representatives is seeking unspecified treatment. Reuters was unable to independently confirm the accusations.

The charge is one of the first signs of costs faced by companies in the wake of a widespread campaign against sexual harassment.

Netflix turned a DVD-by-mail business into an online competitor of movie channel HBO. As it grew it began licensing its own original shows to ensure a stream of new offerings if studio suppliers ended deals.

In fact, Walt Disney Co is making a major push into online streaming and will pull its first-run shows and movies from Netflix in 2019 as Hollywood fights for audiences.

Netflix plans to spend up to $8 billion this year on TV shows and movies to fend off Disney, Amazon.com Inc, studios-owned Hulu and local competitors that are jumping into online video, and it is turning more and more to high-budget projects, such as the roughly $90 million "Bright."

In 2017, Netflix recorded its first full-year profit in international markets. The company has said it is aiming for steady improvements in profitability overseas this year.

"We believe our big investments in content are paying off," Netflix said in a quarterly letter to shareholders.

Netflix is raising its marketing budget faster than revenue is growing and will spend about $2 billion this year. The company expects negative cash flow in 2018 of $3 billion to $4 billion, up from $2 billion in 2017.

Last October, Netflix raised prices for two of its three main subscription plans to help fund the substantial content investment. The earnings report showed customers took it in stride.

"Consumers are tolerant as long as something's improving," Netflix CEO Reed Hastings, on a post-earnings webcast, said of the price increase.

For the December quarter, Netflix reported diluted earnings-per-share of 41 cents, even with the expectations of analysts polled by Thomson Reuters I/B/E/S.

Revenue for the three months totaled $3.286 billion, in line with forecasts.

Looking ahead, Netflix forecast streaming customer additions of 6.35 million for the first quarter, above analysts' expectation of 5.01 million, according to FactSet.

Investors appear confident in Netflix's ability to grow. Netflix recently traded at 91 times expected earnings for the next 12 months, versus Amazon at 152 times earnings and Disney at 17 times earnings, according to Thomson Reuters data.

Netflix also said Monday that Rodolphe Belmer, CEO of global satellite company Eutelsat, had joined the company's board.

source: news.abs-cbn.com

Netflix shares plunge as subscriber forecasts miss estimates

Streaming video service Netflix Inc. forecast US and international subscriptions would grow at a slower pace than Wall Street expected this quarter, sending its shares tumbling eight percent in after-hours trading on Monday.

Netflix said it expected to add about 500,000 customers in the United States in the second quarter that ends in June, compared with Wall Street targets of 586,000, according to FactSet StreetAccount. The forecast includes a "modest impact" from the beginning of a price increase for its monthly movie and TV subscription service, the company said.

The company known for its original shows including "Orange is the New Black" and "House of Cards" said it expected to add about 2 million subscribers in markets outside the United States, versus analyst expectations of 3.5 million, according to FactSet. It also reported results for the first quarter, when subscriptions outpaced its own target.

Netflix is prone to large stock price swings as investors bet on the possible success of its mission to redefine television viewing around the world.

The company's long-term results depend in large part on how fast and profitably it expands. Netflix has launched in almost every country in the world, at a substantial cost, and now faces the task of adapting the service to different markets and cultures as competitors also rush in.

In January, Netflix went live in more than 130 countries, a huge global push by Chief Executive Reed Hastings to counter slowing growth in the United States.

Initial sign-ups were limited in some countries because the service at this point offers only English-language content and does not accept all of the local payment options, Hastings said on Monday.

"Over the next couple years as we further localize, we'll be able to see more opportunity," Hastings told analysts on a conference call. Netflix has not yet launched in China, where it has been exploring an entry for some time. It said on Monday it was "continuing discussions" and that "whatever we do," the Chinese market would have only a modest financial effect near-term.

The company previously promised "material" global profit in 2017 as it begins to reap the benefits of its costly expansion. A spokeswoman said Netflix is sticking with that forecast.

"I think that people who relied on unbridled international growth are beginning to have second thoughts, and the company now faces domestic competition that may limit its ability to grow domestic profitability," said Wedbush Securities analyst Michael Pachter, who has an "underperform" rating on the stock.

Amazon.com Inc announced it would offer its video streaming service as a standalone monthly subscription as it looks to drive membership in its Prime subscription service.

Netflix said its forecast for fewer international additions than the prior year was due to tough comparisons with the year-ago period when it had launched in Australia and New Zealand.

The company will start boosting rates for more than half of its U.S. members from May.

"We are rolling this out slowly over the year, rather than mostly in May, so we can learn as we go," the company said in a statement.

Netflix also said it expected to increase its spending on movie and TV content from about $5 billion in 2016 to more than $6 billion in 2017.

From January through March, Netflix added 6.7 million subscribers, bringing its worldwide total to 81.5 million.

Net income for the quarter was $28 million. Earnings per share came in at 6 cents, beating the forecast of 5 cents from analysts surveyed by Thomson Reuters I/B/E/S.

Over the past year, Netflix stock had risen more than 60 percent, making it the No. 3 performer on the S&P 500.

The company's shares were down 8 percent at $99.70 in after-hours trading on Monday.

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