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Netflix to invest in movies and series over live programming

Netflix

On demand video platform Netflix added 6.7 million subscribers in Q1 2016 taking the total count to 81.5 million subscribers worldwide. The  company reported a net income of $27.66 million for the quarter ended December 31, 2015, up 16.84% from $23.7 million in the same quarter last year.

In the preceding quarter, the company had a net income of $43.18 million. The lower profit was attributed to investments made for the 130 country launch last quarter.

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 strategies. Here are some of the takeaways.

Netflix will not get into linear programming and live streaming

Hastings said that the company has no interest in getting in linear programming or live streaming of events such as sports. “We’re focused on having content around the world  which is why we’re investing in original movies and series. And that’s very different from carrying single nation’s networks. So that’s just a very different business and not one we focus on a lot. We know what we want to be, which is a great global producer and distributor of content. Other people will do other things and that’s fine,” he added.

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Subscribers using VPNs are “inconsequential” 

In the last quarter, Netflix announced that it was working on employing measures to stop members from using proxies or ‘unblockers’ from accessing content from other countries. Hastings said that the impact from these changes did not affect the company’s revenues. “It’s a very small but vocal group minority. So it’s really inconsequential,” he added.

On mergers and acquisitions

“It’s been 15 years since we went public and 20 since our existence. So I think that probably speaks for itself.”

On offline viewing

“We should keep an open mind about this,” Hastings explained. “As we expand around the world, where we see an uneven set of networks, it’s something we should keep an open mind about.” he said.

Data savings

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Hastings added that Netflix would add data savings options for mobile networks.

“Mobile generally has small data caps and very expensive per gigabyte charges. So we wanted to save data by using very small encodes, especially when it is being watched on a small 4-5 inch screen. So we’re going to add an option which will say extreme data saving, moderate data saving or no data saving at all.”

***

Financials

– Net income for the quarter stood at $27.66 million, up 16.84% from $23.7 million in the same quarter last year.

– Total revenue came in at $1.96 billion, compared with $1.57 billion in the same period last year. This represented a growth of 24.84%

– Netflix added 6.7 million total net subscribers in the quarter, up from 4.88 million additions in the previous year.

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Watch the earnings interview here

Download: Letter to investors and financials

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