Home Entertainment Rules As Netflix Records Stellar Quarter

Eye popping 700,000 new customers sign up in fourth quarter alone
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If TV executives are trying to find their lost viewers, they need look no further than the mailbox.

Netflix, the company which mails out DVD rentals and also offers streamed programming via the internet, saw a 45% jump in profits and 26% rise in consumers to 9.4 million in the fourth quarter.

An astounding 718,000 new customers signed up in the fourth quarter, up 8% on the third quarter and 26% over the fourth quarter 2007. Net income for the last three months of 2008 was $22.7 million, up from $15.7 million in the same quarter a year previously. Net income for the full year was $83 million up from $66.6 million in 2007.

The results underline the extent to which viewers want to watch their programming uninterrupted by commercial breaks and on their own schedule. The numbers also indicate that more people are looking for affordable entertainment during a recession, which could be a positive sign for competitors including cable on demand services and premium tier programming channels such as HBO and Showtime. The customers appear to be increasingly comfortable downloading movies and television from the internet. Netflix has plans to offer its service through hardware in TV sets in the future.

"Consumers embraced the Netflix experience in near record numbers last quarter," said CEO and co-founder Reed Hastings, "with growth in our core DVD offering and growing momentum with internet streaming."

Netflix is giving Wall Street guidance that full year subscriber numbers in 2009 will rise to between 10.6 million and 11.3 million, while revenue will reach between $1.58 billion and $1.6 billion.

The news is in contrast to the declining DVD sell-through market affecting media companies and retailers. DVD sales in the U.S. were down nine percent to $14.5 billion, according to the Digital Entertainment Group, while DVD rentals were flat at $7.5 billion.