uploads///NFLX domestic memberships

Netflix: Growing Memberships in the Domestic Market for 2Q15

By

Updated

Domestic streaming segment

Netflix (NFLX) is an OTT (over-the-top) online streaming service that operates in 50 countries. At the end of 2Q15, Netflix had ~65 million members globally, a rise of 31% over the same quarter last year.

Netflix had 0.9 million net additions in the second quarter, with ~42.3 million members in the domestic streaming segment at the end of 2Q15. These net additions in 2Q15 exceeded Netflix’s internal forecasts of 0.3 million for the second quarter.

As you can see in the above graph, Netflix’s domestic streaming memberships have been increasing steadily through the quarters. Memberships rose 17% in 2Q15 compared to the same quarter last year.

The company’s domestic streaming segment had revenues of $1 billion for 2Q15, an increase of 22% over the same quarter last year. This increase in revenues is due in large part to the average monthly revenue per paying membership growing 5% in the second quarter to $8.41 per month.

The rise in average monthly revenue was due to a large number of Netflix customers opting for the high-definition (or HD) plan priced at $8.99 per month. This plan allows HD streaming on two screens concurrently.

Article continues below advertisement

Reasons for the sharp rise in memberships

According to Netflix, the reason for the high growth in memberships in the United States is the company’s strong original content. In the second quarter, the company’s original programming included Daredevil, Sense8, Dragons: Race to the Edge, Grace and Frankie, and Orange Is the New Black. Marvel’s Daredevil series was produced by The Walt Disney Company’s (DIS) ABC Studios exclusively for Netflix.

Netflix’s original content programming gives it an edge over linear programming networks like 21st Century Fox (FOXA) and CBS (CBS).

You can get a diversified exposure to Netflix by investing in the Consumer Discretionary Select Sector SPDR ETF (XLY), which holds 1.87% of the stock.

Advertisement

More From Market Realist