Netflix Q4 2010 revenue jumps 34% despite marketing cut

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Netflix said January 26 that it spent 10% less on marketing in the fourth quarter of 2010 compared with the same period of the prior year. However, it saw $596 million in Q4 revenue, a year-over-year increase of 34%, as well as net income of $47 million, up 52% compared with Q4 2009.

Netflix also added more than 7.7 million subscribers in 2010, including 3.08 million in Q4, to bring its total subscriber base to 20.1 million. It generated $2.1 billion in full-year 2010 revenue.

The company attributed the growth in part to its introduction of a $7.99 per month steaming-only subscription plan, which it said more than one-third of new subscribers signed up for.

“Although the video-on-demand space has a lot of competitors, we've seen record-low churn and record growth,” said Reed Hastings, Netflix CEO. “Streaming has continued its tremendous growth for us…Our greatest competitive advantage in streaming is our subscriber base, which allows us to get more content, to do more research and development, and to market more.”  

Before Netflix released its earnings, JP Morgan analyst Imran Khan predicted the company would report surpassing 19.5 million subscribers by the end of last year. Khan added that he expects the number of Netflix subscribers to reach 26.6 million by the end of 2011.

Netflix said it expects to reach between 21.9 million and 22.8 million subscribers in the first quarter of 2011, and revenue of as much as $704 million. The company said it also expects operating income to run between $98 million and $116 million, and that it will expand its reach to social media.

“We'll be rolling out a Facebook integration over the course of the year, month by month,” Hastings said.

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