Wall Street Watch Wednesday: Netflix Needs More Eyes on the Prize

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Netflix subscribers quarterly reportNetflix (NFLX) is having a hard time keeping up with its past. Shares of the video service provider tumbled on Tuesday night after posting disappointing domestic subscriber numbers in its latest quarter.

Netflix closed out its September quarter with 25.1 million stateside streaming accounts. That may be 20% ahead of where it was last year, but it's at the low end of its earlier guidance which called for 24.9 million to 25.7 million accounts.

Things held up better elsewhere. Netflix's 4.3 million international streaming customers and 8.6 million DVD-based renters actually clocked in at the high end of its summertime range. However, since domestic streaming is clearly where the company's focus is these days, it's certainly problematic. Are folks just not sticking around or is it having a hard time lining up new trial signups?

In an interesting comment in the last night's letter to shareholders, Netflix explains that "voluntary churn" is actually the lowest that it's ever been. It is "involuntary churn" that's a problem. That basically means that as the service reaches out to lower-income households to grow its audience, its finding that many of them just don't have the $7.99 a month to justify a Netflix subscription.

Other Things Worth Watching

• It isn't all bad news among the dot-com bellwethers. Facebook (FB) posted encouraging results in its second quarterly report since going public back in May. Revenue and earnings were essentially in line with expectations, but the market is encouraged to see a 36% pop in advertising revenue. Skeptics have been wondering if the company can monetize mobile usage as more members rely on smartphones and tablets to surf the social networking website. Cynics may have no choice but to click the "like" button here after seeing Facebook's success in growing its ad revenue.

• Sirius XM Radio (SIRI) will need to drum up a new CEO. The satellite radio giant revealed that Mel Karmazin will step down as CEO in February. There was speculation that this would happen. Karmazin even lobbied against himself by arguing that he has been historically expensive to keep around. As the mastermind of the merger that united Sirius and XM, steering the media giant to profitability, he won't be easy to replace.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Netflix and Facebook. The Motley Fool has bought calls on Facebook. Motley Fool newsletter services have recommended buying shares of Facebook and Netflix and recommended creating a bear put ladder position in Netflix.



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Waz up Daddy?

Where they're losing the streaming market share is in their available catalog choices. I don't see a reason that older movies cannot be viewed immediately, rather than having to order the DVD's. And the content that they do offer on new movies is so limited. Most movies are B and C type. I'm afraid i will have to cut my losses as well and jump ship until someone offers quality streaming in their programming.

October 24 2012 at 11:46 PM Report abuse rate up rate down Reply
Lowell

Netflix is great as far as we are concerned. Yes, many in the catalogue are older films but we often choose them because we never saw them when they were in the theaters. We use the DVD rental plan and the service is SUPER! We mail (free) a DVD back one day, Netflex gets it the next day and ships us the the next on our Queue that day and we recieve it the following day. Can't beat that! Tonight we'll see "The Best Exotic Marigold Hotel". Great film!! We saw it in a theater in June and wanted to see it again. So that's not an old film! We also rent many foreign films and most are fabulous - some we've watched twice. GO NETFLIX - YOU'RE GREAT!!

October 24 2012 at 12:23 PM Report abuse rate up rate down Reply
Todd Odson

This is in regards to Sirus. Who wants to pay for Radio broadcasting with ADVERTISMENTS when it is already free. I am a first time subscriber and when my subscription is up I do not plan to renew it. I am tired of the same old commercials replaying for 3-5 minutes. No I don't need a new ***** from Adam and Eve. no I don't need to get out of tax debt, no I don't need a bigger... I don't understand how Sirus can keep customers loyal when they are double dipping. Some will claim that it keeps the prices low, however the radio is FREE, and they get by well enough on just advertisements, and I am pretty sure they are not making nearly the amount that Sirus makes. Hell, just with subscription costs alone I am sure they make more then broadcast radio. In closing I speak for myself when I say, I am not paying to listen to a radio broadcast that is no different than any other free broadcast radio station. Lose the advertising, or at least cut the amount of airtime it gets. I am sure I am not the only one who feels this way and have decided to end my services after the subscription is up.

October 24 2012 at 11:55 AM Report abuse rate up rate down Reply
BIG PAPI

maybe if the movies were updated once every few years we would not cancel the subscription

October 24 2012 at 10:22 AM Report abuse rate up rate down Reply
Anthony

Ya netflix streaming really sucks. It is only good if there is a show series you like on it cause then you can just watch every show from there. However the movies are still the same and they are the ones no one watches except for a few but im sure people already watched ironman lol.

October 24 2012 at 8:48 AM Report abuse rate up rate down Reply
jmtlfix

This is the result of raising it's monthly fees and the fact that instant streaming titles are pretty limited versus its DVD library. But I love Netflix...they are super efficient and turnaround is very quick.

October 24 2012 at 8:13 AM Report abuse rate up rate down Reply
Jay

Netflix is in serious need of updating its streaming service. They have few if any good titles on it.

October 24 2012 at 7:22 AM Report abuse rate up rate down Reply
charpist5

I have Netflix streaming, it is the only Netflix I have ever used. I can't get it on the Blackberry Playbook, and it seems I never will. Since most of the movies are SO old, and the tv shows SO not current, I am thinking about dropping out.

October 24 2012 at 6:43 AM Report abuse rate up rate down Reply
1 reply to charpist5's comment
michele

I agree, me too!!

October 24 2012 at 9:21 AM Report abuse rate up rate down Reply