Reed Hastings Catches a Break

The heat is finally coming off Netflix CEO Reed Hastings.

Image: Wired.com

Netflix and its chief executive Reed Hastings took much flack last year over the decision to raise rates, and separate its mail and streaming sector (the latter move was quickly reversed).

But when the company reported fourth-quarter earnings Wednesday, its increase in subscribers took the company itself by surprise and its earnings surprised investors: Revenue for the fourth quarter totaled $875.6 million, up 47 percent from the same quarter last year. Profits of $40.7 million reflected a 14 percent drop compared to last year, but that came amid investment in content rights and a necessary move to grab new subscribers.

As the New York Times reports:

Reed Hastings, the company’s chief executive, said he was encouraged by the number of new sign-ups for streaming video, the service that he is emphasizing as Netflix’s DVD-by-mail service shrinks. In a letter to investors, he and the company’s chief financial officer, David Wells, called Netflix a “global Internet TV network,” reflecting the growing importance of TV shows to a company that started as a distributor of movies on DVD. Netflix is also beginning to make its own shows, in much the same way that HBO and Showtime do.

The upshot: for content delivery, streaming is where it's at.