Please ensure Javascript is enabled for purposes of website accessibility

4 Billion Reasons Netflix Is Soaring

By Anders Bylund - Apr 14, 2013 at 8:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What do 1.3 billion hours of monthly Netflix viewing really mean?

Netflix (NFLX 1.76%) CEO Reed Hastings got himself and his company into some trouble last summer. Hastings used his personal Facebook (FB 0.78%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$189.80 (1.76%) $3.29
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
FB
$201.59 (0.78%) $1.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.