Netflix Pledges to Double Investment in Originals in 2014

LOS GATOS: Netflix added 1.3 million domestic subs in Q3 for a total of 31.09 million and 1.4 million new international subscribers to expand its base to 9.19 million.

Its U.S. net additions were 11-percent higher than the prior year Q3, due to the increasing strength of Netflix's content offering, which included strong buzz generated by Orange is the New Black and the Emmy nominations (and wins) the service garnered. Netflix is expecting to add a further 2.01 million subs in Q4 domestically. Internationally, growth was driven by the expansion to the Nordics and the Netherlands. The service is forecasting a further 1.31 million international subs for the fourth quarter of the year, which will bring its base above the 10-million mark. Netflix says that launches in new markets are on the planner for next year.

Also part of the company's 2014 outlook is ramping up original programming. "Over the next few years we aspire to support creation of some of the most compelling and remarkable content ever produced," Reed Hastings, CEO, and David Wells, CFO, said in a letter to shareholders. "Coupled with the flexibility of our Internet viewing and power of our personal recommendations we will keep changing television for the better." The plans are to double its investment in original content, though still representing less than 10 percent of all global content expenses. Coming to Netflix in 2014 will be second seasons of House of Cards, Orange is the New Black and Hemlock Grove as well as a new project from the creators of Damages. A number of new animated series from its partnership with DreamWorks Animation are also set to rollout.

Hastings and Wells also told shareholders that they were pleased with Netflix's global profitability for the quarter. "We delivered on our targets despite the faster amortization of original content, which pulled forward into Q3 about $27 million in expense from future quarters, due to more members and revenue than expected and by adjusting spending in Q3 on other items."