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Netflix Subtle Warning



January 24, 2012 – Comments (0) | RELATED TICKERS: NFLX

Q3-11 Domestic Streaming subs: 21.45M
Q3-11 International subs: 1.48M
Q3-11 Total Streaming Subs: 22.93M

About Netflix:

With more than 20 million streaming members in the Americas, the United Kingdom and Ireland,

Netflix launches in U.K. and Ireland in late Q4 so the number mentioned above must be current.

The company is sticking to its recent forecast that, despite negative consumer growth in October and November, December would turn up.

Why a *December* sub rebound and even into early 2012 is built on one time events and gimmicks and will not be sustainable.


The Bottom line it looks like they will miss badly on their Q4 sub guidance: 20M-21.5M Domestic, 1.6M-2M International resulting in 21.6M-23.5M total vs. the latest disclosure of over 20M total. The 20M number includes the U.K. and Ireland which didn't launch until the end of Q4 so it's clear they are telling you this represents a current number.

You can see they are setting up to spin progress in December as the start of strong growth again. Defections in December likely slowed as a large number who would have left then were pulled forward to September-October and there are no existing subs in the newly launched international markets to defect and offset gross additions in these markets which will make the net additions from these markets artificially strong for a couple of quarters. December was not the beginning of strong growth again it is a mirage.

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