4 Billion Reasons Netflix Is Soaring


Netflix CEO Reed Hastings got himself and his company into some trouble last summer. Hastings used his personal Facebook page to reveal the fact that Netflix users spent 1 billion hours in front of streaming videos in June. Critics said this information was valuable to shareholders and would have been more appropriate in a more traditional medium such as a press release or an SEC filing.

The SEC took a look, decided to allow social-media postings to carry investable information -- and Hastings is back on Facebook again. This time, the news is that Netflix users streamed 4 billion video hours in the first quarter of 2013. Here's the whole posting:

Source: Facebook.

If the billion-hour tidbit was material to investors, this posting shouldn't be any less valuable. Converted into "more than 1.3 billion hours per month," it's at least a 33% increase in viewing hours on a global level compared with that market-moving note from last June.

So what do these billion-scale numbers really mean?

If viewer engagement has stayed constant over the past nine months, the figure would mean that Netflix grew its global subscriber base by more than 34%. That would be on the high end of Hastings' subscriber guidance for the first quarter, which gets a full report in less than two weeks.

Or, with subscriber counts at the midpoint of official guidance ranges, you'd get a 3% increase in monthly viewing per user. That would help Netflix suppress the dreaded churn of users getting bored and leaving the service.

The truth probably straddles both dynamics, with a heavier lean on high subscriber numbers than increased engagement. I do expect churn to get guided down a bit as the slate of original Netflix shows makes its presence known. House of Cards is a hit, Hemlock Grove hooks into a suddenly red-hot horror-movie market, and Arrested Development comes with a fully developed fan base. And most of their eyeball-grabbing action falls in the second quarter.

Keep your eyes open for more of Hastings' Facebook posts if the second-quarter report leaves you wanting more.

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The article 4 Billion Reasons Netflix Is Soaring originally appeared on Fool.com.

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