After reporting better-than-expected fourth-quarter results on Wednesday, Netflix (NASDAQ:NFLX) stock is up strongly. At the time of this writing, shares are up about 6% on Thursday. While the optimism surrounding the stock is likely mostly tied to the company's impressive numbers from the quarter, it's useful for investors to take a step back from the quarter-to-quarter figures and get a feel for management's overarching tactics and strategies. Fortunately, management guided investors in this direction during the company's conference call Wednesday afternoon.
Here's a look at some of the most interesting quotes from Netflix's fourth-quarter earnings call.
Popular U.S. content is working globally, too
Despite its domestic characteristics, Gilmore Girls is popular outside of the U.S., too -- and the same is true for many of Netflix most popular shows. This means the company's biggest original content investments may go further than management initially anticipated.
Netflix Chief Content Officer Ted Sarandos explained:
We had a pretty powerful release in Q4. So, you see, particularly shows like Luke Cage, new seasons of Narcos, that really travel really well around the world. And we know that they're exciting here as consumers of television in America, but it's been fantastic to see how these shows are adopted around the world. ... And a nice upside surprise was something like Gilmore Girls, where you'd think would be incredibly domestic in its popularity, but we found it to be incredibly internationally popular as well, particularly performing great in Europe.
The tipping point
Netflix CEO Reed Hastings took the time to explain what makes people join Netflix. He emphasized it's not about a single new movie or TV show launched on the platform, but rather the culmination of a growing library of popular content.
Think of it as its accumulative effect. Very few people will join Netflix just because of a single title. But there's a tipping point when you have one more title that has great excitement that you're hearing a lot about and that triggers you to finally sign up for Netflix.
Internet TV is still Netflix's biggest driver
But, when members sign up, new shows and movies may only represent the final call to action, Hastings explained. The biggest driver for the company is the underlying transition to internet TV.
The basic demand creation is increasing as people get more comfortable and more aware of the idea of internet television, where you don't get the commercial interruptions, where you just get to watch when and where you want. So, those are the big drivers.
Hastings still credits the secular transition to internet TV for the bulk of Netflix's growing popularity.
In short: Popular new shows get customers to pull the trigger and sign up, but a transition to internet TV is driving broad interest in the first place.
Don't expect any big bundling deals soon
When asked to comment on speculation about Netflix bundling its offering with other content carriers, Hastings seemed to suggest there's no significant reason to do anything like that in the near term.
We wouldn't want to speculate on future deals. And, in general, around the world we've done extremely well focusing on our service as a discreet service -- $7.99 a month -- and incredible content. And so, we're just going to keep pounding that drum as we expand around the world and also here in the U.S.
This commentary from Netflix management continues to drive home the importance of the two biggest trends working in the company's favor: a focus on original content creation and the growing popularity of internet TV. Fortunately for investors, there's no reason to expect either of these important catalysts to let up anytime soon.