Netflix touts instant streaming growth, says DVD has ‘peaked’

Netflix released its quarterly Letter to Investors report this Monday, handily countering the recent undercurrent of criticism towards the instant streaming leader with strong figures. In its Q2 earnings summary, the company boasted year-over-year growth of 70 percent, bringing the total number of Netflix subscribers to 25 million. And with a Latin American expansion tentatively scheduled for later this year, that number may only rise.

Netflix touts instant streaming growth, says DVD has 'peaked'

The letter (.pdf), penned by CEO Reed Hastings and CFO David Wells, also addressed a wealth of concerns for the company moving forward – from the staunch competition posed by fellow instant streamers Hulu and Amazon, to customers’ complaints over the controversial price increase scheduled to take effect for current members in September.

Netflix executives have ostensibly made peace with the fact the service may shed an unknown number of subscribers due to unpopular changes to its pricing structure. Two weeks ago, the company announced it was raising the price of its popular by-mail DVD rental and instant streaming package from $9.99/month to $16.98/month. Each service will also be available in stand-alone form for $7.99/month.

“We hate making our subscribers upset with us,” reads the letter, “but we feel like we provide a fantastic service and we’re working hard to further improve the quality and range of our streaming content in Q4 and beyond.” Netflix cited deals with NBCUniversal, Viacom and Miramax as proof of that effort.

One particular concern further inflamed by the price hike is that the DVD side of Netflix’s business, which many count as a major contributor to its unrivaled growth, would soon be forced to exit stage left.

Netflix’s stance is unabashedly wishy-washy: it’s bowing a new physical media division designed “to keep DVD as healthy as possible for as many years as possible,” though admits interest in DVD rentals has “likely peaked.” By the end of the next fiscal quarter, the company predicts 10 million subscribers will choose the streaming-only service, while 3 million people will choose the DVD by-mail option exclusively. However, Netflix expects 12 million customers will opt for the combo package at its provocative new price point – enough interest for the company to plainly state that it has “no intention of selling [the DVD rental operation.]”

One undeniable bright spot for Netflix – even as new research paints a severe drop-off in positive buzz for the company – comes from the Great White North. Netflix revealed that since the service’s 2010 launch in Canada, it’s earned almost 1 million subscribers.

Has your opinion of Netflix suffered in light of recent events, or are you still a die-hard subscriber? Let us know in the comment section.