David Farnor | On 24, Jan 2014

Netflix now has more than 44 million subscribers worldwide.

The company announced the new figures in its quarterly profits report, which was released to shareholders this week. The Internet TV company overtook HBO in the third quarter of 2013 with 30 million US subscribers, more than its cable TV rival. Now, that number has grown to 33.4 million members as of the end of last year. Internationally, the company ended 2013 with 10.93 million members in the UK, adding 1.7 million in the three months to the end of December, slightly above their original forecasts.

That growth shows no sign of stopping, as Netflix expects to add another 2.25 million US members and 1.6 million international members in the first quarter of 2014, taking its total number of subscribers to 48 million. Netflix also has plans for a “substantial” expansion in Europe this year, CEO Reed Hastings wrote in a letter to shareholders. Netflix is currently operating in the UK, Ireland, Netherlands, Norway, Sweden, Denmark and Finland. Germany and France are both lined up for new markets.

The figures capped off a strong 12 months for Netflix, which saw it take a financial gamble on producing new original content, from House of Cards and Orange Is the New Black to Arrested Development and Hemlock Grove. The last quarter of 2013 included the release of its first collaboration with DreamWorks Animation, Turbo F.A.S.T., its first second season of an original show – Lilyhammer – original stand-up comedy specials from Aziz Ansari and its first original documentary, The Short Game. So far, Netflix original series have received over 80 major award nominations and wins, including The Square, released last week, which is competing for an Oscar for Best Documentary.

“Turbo F.A.S.T has been very popular with kids around the world, performing especially strong throughout Latin America,” reveals Reed Hastings. “Though just launched, Turbo F.A.S.T. is on track to become one of the most popular kids series ever on Netflix.”

The challenge for Netflix is to generate a wide enough profit margin to be, well, profitable. While its content is attracting new subscribers in all territories, growing the company rapidly, it comes at a cost that eats heavily into its revenue, especially because its membership fees are kept so low. But the Q4 report suggests the company is on to a winner, with profits rising more than fivefold to reach $48.4 million in the fourth quarter, while revenue also jumped 24 per cent to $1.18 billion.

With the upcoming release of House of Cards Season 2, a third season of Lilyhammer, more episodes of Hemlock Grove and Orange is the New Black, plus an exclusive final season of The Killing, 2014 is set to be an equally strong year for the Internet TV company. (The Wachowskis’ Sense8 and Daredevil, the first series from Netflix’s deal with Marvel Television, are already lined up for 2015.)

Producing original content, then, is definitely the continuing strategy for the service. But it may also begin to experiment with pricing too.

Last April, Netflix introduced an $11.99 monthly option in the US, which gave subscribers the ability to stream Netflix on four separate devices at once. Since late last year, they have also been testing one-stream and three-stream variants, as well as SD/HD options. In the UK, £5.99 is the standard tier for HD content on up to two decides, with another option available for four devices in HD at £8.99 per month. A cheaper £5.29 package has also been trialled for one-stream users only wanting SD content – prompting speculation that a three-tier model will soon become standard.

“Eventually, we hope to be able to offer new members a selection of three simple options to fit everyone’s taste,” confirmed Hastings to shareholders, but added: “We are in no rush to implement such new member plans and are still researching the best way to proceed.”

The letter concluded: “It’s been a good year for Netflix.”

You can say that again.

What’s new on Netflix UK? View our list of the new releases.

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