LOS GATOS, CA – Netflix has surpassed, albeit slightly, its target of 1 million Canadian subscribers a year after launching.
In a note to shareholders on Monday announcing its third quarter financial results, CEO Reed Hastings and CFO David Wells said that the company has hit the 10% of Canadian household penetration mark, resulting in “a small contribution profit in Q3 in Canada”.
The streaming service also pledged to double its quarterly content spending here, starting by adding hit feature films in their first pay window such as True Grit, Black Swan and Chronicles of Narnia: Voyage of the Dawn Treader plus premium catalog film titles and more TV series.
“By the time we’ve added all this great entertainment, we will have comparable content quality to what we have in the U.S., and be spending the population-adjusted equivalent”, reads the note. “This investment will push contribution margin back under in Canada for a few quarters, and our plan is to achieve consistent positive contribution profit starting in Q3 of next year, two years after our initial launch.”
The note also said that Netflix has experienced “strong connect rates” in both Canada and Latin America, where it launched in September, for its Facebook integration initiative that allows subscribers to share what they watch on Netflix with their friends on Facebook and communicate about that content.
The company reported a loss of approximately 800,000 of its U.S. customers in the third quarter ended September 30, substantially more than it had predicted it would lose in a forecast released last month. International subscribers, which includes Canada and 43 countries in Latin America, were 1.48 million by quarter end.
Looking ahead, Netflix said that it expects that its fourth quarter international subscriptions to come in between 1.6 to 2.0 million. It also confirmed plans to launch in Ireland and UK in the first quarter of 2012, a market of approximately 26 million households.
