26 January 2012 at 14:50 GMT
Netflix beat analysts’ expectations, with revenue increasing by 6 percent but profits were down by 27 percent on large marketing costs.The increase in revenue was due to the new pricing structure from the separation of DVD and streaming, but is by no means an indication of things to come. What is more worrying is that paying streaming subscriptions were down 2 percent and DVD paying subscribers were down 20 percent.
Although Netflix faces many competitive hurdles, we have yet to see if the new pricing structure and the massive streaming content expansion will be worthwhile for the company. One thing is for sure, there is no guarantee that Netflix shares will return to where they traded in July of last year (just below 300). Investors should probably not be sucked in to the market reaction from today’s results.
For more on the struggles of Netflix see my previous theme.