Netflix Loses $100 Million In First Quarter Of 2012, Blames European Expansion
Netflix shares took a tumble today after the company revealed thay they lost $100 million during the first quarter of 2012, which has been attributed to cost in bringing the service to the UK & Ireland.
Their US division lost $5 million, which accounts for 88% of its 26 million subscribers. Netflix made $60 million profit in the first quarter of 2011, but the profit has since been cancelled out by the costs of bringing the service to the UK.
Their continued expansion into international markets has seen a 65% rise in subscribers to 3.07 million, of these, 2.41 million were paid subscribers; with the remainder joining through free trials. Revenues at the international operation grew by 48% to $43m.
After today’s result Netflix is forecasting a loss of around $90 million from its international expansion in the second quarter, with Canada expected to deliver a small profit.
Today’s results didn’t come as much of a surprise as they warned investors in October that the UK launch would push the company into a global loss for the first quarter of 2012.
On Monday Netflix said they they expect to return to global profitability as soon as the second quarter of this year and would launch into “attractive” new European markets in the fourth quarter of 2012.
Spain is tipped as Netflix’s next market launch, joining Latin America, Canada and the UK and Ireland. But these plans didn’t calm nervy investors as their shares plummeted almost 17% in after-hours trading.
Netflix reckons that if the Competition Commission breaks Sky Movies’ stranglehold on Hollywood pay TV and on-demand it might look to accelerate its plans to bid for one of the content contracts with the big six US film studios, something that BSkyB currently owns on a exclusive basis.