Confounding its own outlook for slowing growth in the fourth quarter, Netflix said its subscriber base grew by a robust 26 percent year over year to about 9,390,000 subscribers at the close of 2008.
“In hindsight, we underestimated the positive impact of the introduction of the multifunction consumer electronics devices from LG Electronics, Samsung, Microsoft and TiVo that promote Netflix streaming,” said Reed Hastings, Netflix cofounder and CEO. “The precise impact of the recession is unclear, but it is very clear that streaming is energizing our growth.”
Increased Investments
Netflix substantially increased its investment in streaming content over the Internet during the fourth quarter and plans to do the same this year. “Most of our streaming content spending is directly with TV networks and studios,” Hastings told investors. “We now have over 12,000 movie and TV choices, up from 2,000 two years ago, and we are already one of the studios’ largest revenue sources.”
Netflix is also beefing up its content-streaming capabilities on the hardware side. Earlier this month, the company expanded its partnership agreement with LG Electronics and inked a new agreement with HDTV vendor Vizio.
LG Electronics has agreed to embed Netflix streaming software directly into its new line of broadband-enabled HDTVs, eliminating the need for an external device. Additionally, Vizio’s new deal with Netflix means consumers will be able to stream high-definition video content from Netflix to TV sets based on Vizio’s new Connected HDTV platform, which will begin shipping nationwide later this year.
Hastings told investors he fully supports Roku’s recent decision to add functionality to its Netflix-enabled set-top box that would enable consumers to stream pay-per-view content from Amazon.com. Hastings said any increased competition would mostly be indirect because it would come in the form of “big new releases,” which Netflix does not offer as part of its…