Netflix saw a major increase in subscribers in Q3, bringing in another 1.29 million domestic subs during the quarter (up a whopping 11 percent) and 1.44 million in foreign markets. Earnings at the streaming service beat the street at 52 cents per share in Q3.
Interestingly, CEO Reed Hastings was cautious as he answered questions from analysts at BTIG and JP Morgan. "Every time I read a story about Netflix as the highest-appreciating stock on the S&P 500, I worry, because that was the exact same headline you used to see in 2003," Hastings said. The exec credited "soft comps" with some of the company's high year-over-year gains, which he said were "not difficult" to achieve. "I wanted to talk honestly about that," he told investors.
Chief content officer Ted Sarandos spoke a little about viewing patterns on Netflix, which the execs said had resulted in more then 5 billion hours streamed in Q3. "People binge right out of the gate and then settle into a more comfortable viewing pattern," CFO David Wells said. "Unlike other shows that tend to lose audience week over week over week, we accumulate viewers."
He gave specific examples, as well. "When Orange Is the New Black was nominated for Emmy awards, we saw a bump in users and hours watched among people who were trying the show for the first time and among people who had watched the first few episodes already," he said.
Wells admitted that Netflix's by-mail business had gotten slower recently. "It has a lot to do with the U.S. postal system and what happened there," said Wells. "When they shut down distribution centers, it limits what we can do."
Though Hastings said the company was "still not interested in sports," he did tell investors that the company was interested in the film world, encouraging investors to "keep your minds very open" about the kinds of content they'd be working on. "We'd like to do more of that in the movie space—the movies are not coming to Netflix before they hit pay television, almost a year after they've been in theaters, and even though that window is moving, I think we can be more aggressive with windowing," Hastings said. He also suggested that the company would be interested in commissioning documentary programming.
Regarding the new hardware coming out from Sony and Microsoft at the end of the year, Hastings was again cautious. "I think we'll see very little lift from that. The people who have the PS4 and the Xbox One are the people who already have the PS3 and the Xbox 360," he said. "Do those companies pioneer a model where they [go] from 80 million to 200 million through some combination of price and utility? If they do, that's some ways down the road."
And the questioners didn't shy away from the controversial: notorious activist investor Carl Icahn now has a large stake in the company, about which, Hastings says, Icahn remains sanguine. "He says he likes people who make him money and so he's happy with me for now."
There was no discussion of the potential cable deals the company is reportedly seeking.