Netflix Surpasses 20 Million Subscribers

Netflix, the growing streaming video service provider, has surpassed 20 million subscribers the company reported in its fourth quarter earnings statement.

Netflix reported revenue of $596 million, a jumps of 34 percent from the fourth quarter of 2009 when it was $445 million. The revenue of $596 fell just shy of analyst expectations of $598 million. At 87 cents earnings per share, Netflix beat analyst estimates of 71 cents per share handily.

The number of subscribers, at 20.01 million, is significant for the Los Gatos, Calif., company since earlier in the year it forecast it would have 19.7 million subscribers by the end of the year. It represents an increase of 63 percent from the end of 2009 when it had 12.3 million subscribers.

We would say that our huge subscriber growth, fueled by the excitement of watching instantly, impressed even us. More subscriber growth enables us to spend more on streaming content, making the Netflix service even better in 2011, Netflix chief executive Reed Hastings said in a letter to the company's shareholders.

Netflix's stock was up nearly seven percent in after hours trading at $195.49 per share from $183.03 per share at the closing bell.;

The company has faced questioning from analysts regarding its approach to switch in focus from DVD-by-mail subscriptions for the cheaper streaming option. Caris & Co. analyst David Miller said this strategy could slow revenue growth and take a toll on Netflix's financial performance.

Yet, Hastings said the company's streaming plan has been one of the driving factors of its strong performance and allowed it to best its original net subscriber additions estimate by double. At the beginning of last year, Netflix estimated it would gain 3.6 million customers in 2010. In reality it nearly added eight million.

More than one third of new subscribers are signing up for the pure streaming plan, and we expect that percentage to grow over time, Hastings said. He did concede, however, very few subscribers had not downgraded to the $7.99 pure streaming plan from the $9.99 DVD-by-mail plan.

In the letter to shareholders, Hastings also touted the company's international expansion. He said the initial run in Canada has been successful and Netflix will expand into an additional market in the second half of 2011.

In terms of most popular devices to watch Netflix instantly, the company said Window and Mac laptops, Sony's PS3, Microsoft's Xbox 360 and Nintendo's Wii rank ahead of connected TV devices, smartphones and tablets. However, it did say all devices, especially, Apple TV, were growing in Netflix popularity.

Netflix did not make any specific predictions for subscriber growth in 2011, rather it simply expects that number to continue its ascent.