paidContent 50: The world’s most successful digital media companies

19. Netflix

Video, United States (Public)

Last year’s rank: #5

Digital Content Revenue

$2,013,480,000 (62% of total)

Digital Snapshot

“The smart TV revolution is just beginning,” Netflix CEO Reed Hastings told paidContent a few months back. For Netflix, DVD rentals peaked in 2010, while streaming hit two billion hours in Q4 2011. Netflix is now one of the world’s leading multi-device subscription-entertainment access brands. And it remains a frenemy to its studio suppliers.  The network Starz pulled its 1,000 movie sand TV shows from the service last year over a pricing dispute, and, seeing the writing on the wall, Netflix is aiming to build up its own original programming.

Key Move

Too much, too soon? In an effort to maximize the streaming business, where Netflix is growing fastest, Hastings split his company in two — one for streaming only, the other (Qwikster) just for ye olde DVDs. Many users balked at the separation, and a contrite Hastings reversed himself on the separate branding, but retained the Chinese wall. The revolt mauled Netflix’s share price, and international investment threatened to push the company into the red.

Our Methodology

Netflix gets revenue both from DVDs and online streaming. Working out is based on Netflix domestic and international streaming (but not DVD) subscriber counts for each quarter in 2011. But it only began stating customers in this way in Q3 2011. Domestic streaming subscribers were 21.4 million in Q3 and 21.7 million in Q4. Piper Jaffray analyst Mike Olson tells paidContent he estimates Q2 domestic streaming subscribers at 19 million and Q1 at 18 million. That makes for 80.1 million domestic streaming subscribers in 2011. International streaming subscribers are disclosed by Netflix at 800,000 for Q1 2011, 970,000 million for Q2, 1.48 million for Q3 and 1.86 for Q4. That is 5.11 million overseas streaming subscribers. That made for total global streaming subscribers of 18.8 million in Q1, 19.97 million in Q2, 22.88 million in Q3 and 23.56 million in Q4. We take a median of 21 million streaming customers through the year, each paying $7.99 per month for 12 months, making a total of $2,013,480,000 in 2011 streaming revenue.
Source: SEC: 2011 Annual Return

— RA