8 Takeaways from Netflix’s Q2 2014 Earnings Report

/ Jul 21, 2014

Netflix acquires three new indie flicks

Netflix posted another positive earnings report, announcing that it had topped 50 million streaming subscribers for the first time by the end of Q2 2014.

That said, beyond the global subscriber total and beating street expectations, the company had a few other interesting things to say in its letter to shareholders, which I’ve highlighted below:

1. The price hike went smooth.

In its last earnings report, Netflix announced that it would raise prices for the first time since the Qwikster debacle. The changes, which are targeted to new customers for now, went into effect in May. “There was minimal impact on membership growth from this price change,” said Netflix CEO Reed Hastings and CFO David Wells in the letter.

2. Frank Underwood has nothing on the ladies of Litchfield.

When season one of “Orange Is the New Black” debuted on Netflix, it was said (by Netflix) to be its most-watched original series. That trend continues with season two, which debuted in June. According to Netflix, “Orange” is now the most-watched series in every Netflix territory. The campaign to market season two ahead of its launch was Netflix’s “largest content marketing push to date,” which certainly helped.

3. That said, don’t expect Netflix to start talking numbers.

The company is “pleased” with season two of “Hemlock Grove”; “pleased” with season two of Ricky Gervais’ “Derek”; and “pleased” with baseball documentary “The Battered Bastards of Baseball.”

4. That untitled show from the creators of “Damages” still doesn’t have a title.

Seriously, just pick a name already!

5. Why did Netflix decide to do a “late-night” talk show with Chelsea Handler?

Details are still scarce, but in the letter, Hastings and Wells point to how people don’t watch late-night television live as much as they used to. “As with scripted programming, but unlike news or sports, fewer people are watching talk shows live and are instead watching stacked episodes on DVR or online in the days and weeks following initial airing. Our intent is to produce a show with Handler and her team that reflects this shift to on-demand enjoyment and that will appeal to a global audience.”

6. Look out for Netflix gift cards!

Physical gift cards will be “introduced” in stores in the US, Canada, Mexico, and Germany starting later this year — likely timed to the holiday season.

7. Smart TVs are huge in Latin America.

The region is responsible for the highest percentage of Netflix viewing on smart TVs.

8. A solid quarter, but a muted letter.

Unlike in previous quarters, where Netflix came out strong in support of net neutrality, and opposing the Time Warner Cable/Comcast merger, and announcing a price increase, this report was confident, but muted. Nothing to see here, things continue to be good. That was the message. We’ll see how the market reacts.

If you want to hear more from Hastings, Wells, and Netflix chief content officer Ted Sarandos, head over to the company’s Investor Relations YouTube channel, which will host a live stream of its Q2 earnings interview. The interview begins at 5pm ET.

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