Netflix added 3.08 million subscribers in Q4 2010, giving it a total base of more than 20 million subscribers. Revenue for the quarter was $596 million and net income was $47 million.
The company’s $7.99 per month pure streaming plan, which was introduced in November, has attracted more than one third of new subscribers.
Some operational notes from the company’s letter to its shareholders:
- Netflix noted significant progress in moving its service from its own data centers into the Amazon Web Services (AWS) cloud. Netflix now runs thousands of AWS servers. As a result, the company expects minimal CAPEX but more OPEX expenses going forward. Netflix said it has gained assurances from Amazon Web Services that it can continue to scale even if the companies compete on the retail side.
- Netflix advocates an open, regional, no-charges, interchange model. Under this approad, Netflix or its CDN partner pay the costs of delivering bits to the various regional front-doors that the ISPs operate. The ISP carries the bits the last mile to the consumer who has requested them, and they should not charge Netflix of its CDN partner because the end-customer has already paid them for this service.
- Netflix plans to publish ongoing performance statistics about ISPs. Charter is the highest-performance ISP in the United States for streaming Netflix content.
- Netflix the marginal cost of delivering a gigabyte of traffic over a last mile wireline network in the U.S. to be under a penny and falling.
- Because Netflix delivers its content to regional ISP exchange points, little of its streaming traffic goes over the Internet or ISP backbone networks, thereby minimizing ISP costs and avoiding Internet congestion.
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