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Netflix shares jump as outfit adds 10 million subscribers in 2012

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Netflix watched its stock blow up - spiking 35 per cent - on Wall Street on Wednesday after the company reported better-than-expected profit in the company's fourth quarter and a climb in global subscribers to 33 million.

The outfit's outspoken boss Reed Hastings also took the opportunity to have a dig at the competition in the domestic US market by saying that Netflix's top 100 TV shows and top 100 movies outshone those of its rivals and that there was better availability of content on the service.

Here in the UK, Netflix is still ramping up its content, after the video-streaming outfit opened for business in Blighty early last year.

Hastings, whose company is investing in original content production, said in a letter to shareholders:

Like Netflix, Amazon Prime and Hulu are moving towards increasing exclusives and original series, and over time as a group we are likely to compete more like Showtime and HBO do today.

In the UK this is already the case: Sky NOW TV, LOVEFiLM, and Netflix have very limited overlapping content. The same holds true in the Nordics among the various services. In such a world, our originals will be a great asset.

Internationally, the firm said it added 6 million subscribers in the three months ended 31 December 2012.

Year-on-year, Netflix has seen its subscriber base rise by about 10 million users across the markets it operates in.

While the Los Gatos-based company is spending more and more on developing its online streaming service, its legacy DVD-by-post business - which it pioneered in the US and was later copied by now Amazon-owned LOVEFiLM in Britain - continued to surprise with customer inertia leading to the biz retaining healthy margins for Netflix.

Stateside DVD memberships declined less than anticipated during the quarter to 8.2 million, the company said. That fall (380,000 quit the service) has in fact slowed since Netflix introduced a DVD-only plan to its punters.

Netflix saw shares jump 35 per cent in after-hours trading to $139.80, after reporting global revenue of $945m for the quarter and net income of $8m.

Hastings also hinted in his missive to shareholders that he wanted to personalise Netflix even more for its users via a tie-in with Facebook - which the CEO has a stake in.

He said:

Earlier this year, the Video Privacy Protection Act, or VPPA, was modernised and now allows US members to share what they are watching on Netflix with their friends on an ongoing basis. Our members will now be able to choose to have 'friends rows' within the Netflix user interface for friends they have agreed to share viewing with.

Our default settings will not auto-post to Facebook timeline, but members will be able to post to Facebook specific titles they are passionate about. We are excited to roll these features out in the US in the next few months.

Such a feature could of course play very nice with Facebook's Graph Search, which is currently in beta but will inevitably be wrapped in ad goo down the line as that function is deployed to the network's 1-billion-strong userbase. ®

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