LOS GATOS, CALIF. – Netflix said its recent launch of the fourth season of the acclaimed comedy series Arrested Development helped drive up subscriber numbers and revenue for the second quarter.
Revenues for the second quarter ended June 30 were at $1.07 billion, up from $889.2 million during the same quarter in 2012. Netflix recorded net profits of $29.5 million, a 478% increase over the $6.2 million reported for the same period a year earlier.
In its letter to shareholders Monday, the company reported that the show’s strong brand and fan base contributed to “a small but noticeable bump in membership” for the second quarter. Netflix subscribers in the U.S. increased by 633,000 in the second quarter to 29.8 million.
However, the gains fell short of analyst expectations and Netflix’s own earlier projections of around 900,000 new subscribers; as a result, shares of Netflix fell 5% in after-hours trading on Monday to US$248 from $261.96 after releasing its second quarter results.
International subscribers increased by 605,000 during this period to a total of 7.75 million (a breakdown of the number of Canadian Netflix subscribers was not specified in the second quarter results).
In the company’s letter, Netflix CEO Reed Hastings acknowledged that while licensed content accounts for the “bulk of viewing,” the company’s move to feature more original content is starting to “redefine Netflix in the eyes
of consumers.” The first cohort of Netflix original programs earned 14 Emmy Award nominations, including nine for House of Cards, marking the first time an Internet-only TV show has been nominated for top Emmy awards, including one for outstanding drama series.
Netflix said the costs of creating that original content are being amortized over four years or for the license period of the program. “Of the approximately $3 billion in content library net book value we are amortizing, currently around 5% is for originals,” the investor letter states.
