Netflix

Video streaming service Netflix reported a net income of $43.18 million for the quarter ended December 31, 2015, down 48.20% from $83.37 million in the same quarter last year. The company’s profits were down as the company invested heavily into original content programming and its global launch into more than 130 countries.

Reed Hastings (CEO of Netflix), David Wells (CFO) and Ted Sarandos (head of content acquisition) in a post-results interview spoke in some length about the company’s international push, VPNs, and payments . Excerpts from the interview.

On international push

Hastings said that the company is looking at the markets in India, Philippines and Saudi Arabia as significant. He also added that with the international push, there is a huge need for subtitles in languages other than English.

“Those are the countries (India, Philippines and Saudi Arabia) which have a lot of language match. Philippines is a country where a lot of people speak English. We have subtitles in Arabic and we’ve translated our service in Arabic in Saudi Arabia. Then in much of the world – Russia, Poland, central and eastern Europe – we are still only in English. But we’ve got ways to go and we’ll keep adding more languages to make the service more relevant,” Hastings said.

Payments

Wells also mentioned that the company is looking into different payment systems around the world and that Netflix is looking at prepaid cards and gift cards as a payment option. Currently, subscriptions for Netflix can be paid only via an international debit card or credit card.

“We’ve got a pretty robust payments team. We’ve invested in internally in building that out and we’ve become smarter in terms of different payment systems in the world. We’re looking at gift cards and prepaid cards that would open up the market to those who don’t have access to credit/debit card. But we must admit that it’s still pretty early days,”  Wells added.

MediaNama had pointed out that Netflix may be violating the Reserve Bank of India’s guidelines for card-not-present transactions in India (there’s a counter argument that the company may not be in violation … yet).

“We have work to do on payments. In each country, there are local payments and traditions for payments.  So that we’ll start to work on. So, think of the international and global expansion only begun, rather than sewed up and completely done with it,” Hastings said.

VPNs and global licensing

Earlier this month, Netflix said it is working on employing measures to stop members from using proxies or ‘unblockers’ from accessing content from other countries. Answering a query on whether the company would see an impact on the number of subscribers as a result of the measures, Hastings said that they would not see any significant impact. “We’ve always enforced proxy blocking with a black list. Now we’ve got an enchanced and expanded black list. I don’t think we’ll see any huge change,” he added.

Hastings also mentioned that the company is looking at global licenses with content providers to free up their library in different geographies.

“You can call it placating content providers or you could call it playing to their desires. It’s not fair to get content from Canada if you’re not in Canada. So we’re trying to shift to global licenses and we’re working with content providers on that. It’s perfectly reasonable what the content owners want. And we know some people will be affected by this today so that’s why we wanted to be open about it,” Hastings said.

Financials

– Net income for the quarter stood at $43.18 million, down 48.20% from $83.37 million in the same quarter last year.

– Total revenue came in at $1.82 billion, compared with $1.49 billion in the same period last year. This represented a growth of 22.14%

– Netflix added 5.59 million total net subscribers in the quarter, up from 4.33 million additions in the previous year.

Watch the interview here

Download: Financials | Letter to shareholders