UPDATED: CEO Reed Hastings told analysts that the likely price increase is due to the fact that “over the last couple of years we’ve been improving the content selection on Netflix and broadening it.” For that to continue, “we have to eventually increase prices a little bit.” He’d consider having tiers of service but first wants to “be sure we grandfather [existing customers into the new system] cleanly.” As for his opposition to Comcast’s $45B plan to buy Time Warner Cable, Hastings says that Comcast CEO Brian Roberts is “very thoughtful, very long term and very reasonable. But I don’t know that we want anyone to control half of the U.S. internet.”
PREVIOUS, 1:04 PM: Current customers could keep their $7.99 a month price “for a generous time period” if the fees for new customers go up — possibly “a one- or two-dollar increase, depending on the country, later this quarter” — CEO Reed Hastings and CFO David Wells say in a note to shareholders. They slipped that important piece of info into a report that basically reassured Wall Street, sending Netflix shares up 5.7% in postmarket trading. The company generated $53.1M in net income, up from $2.7M in the same period in 2013, on revenues of $1.27B, +24%. The revenue number is on target with the Street’s consensus forecast, and earnings at 86 cents a share beat projections for 83 cents. Domestic streaming subs increased by 2.25M to 35.7M, matching the company’s projection. International subs are up 1.75M to 12.7M, while domestic DVD rental subs dropped by 278,000 to 6.65M. Hastings and Wells say that the international business “is on a path to achieve profitability this year,” though its “substantial expansion into new European markets” in the second half of 2014 will keep it at a net loss. The execs also continued to slam Comcast for a deal Netflix says it felt it had to make to pay the cable giant in order to ensure that its programming is transmitted without annoying delays. If Comcast buys Time Warner Cable, it “would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers” — which is why “Netflix opposes this merger.”
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