Netflix: Profits Up, DVD Shipments Down

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For the first time in the Los Gatos-based company’s history, Netflix is reporting that their quarterly DVD shipments will be down from the same period the year prior. This is in spite of a massive quarterly jump in profits, in which the company is up 86%.

The Wall Street Journal is reporting that the record growth can be attributed to a 69% jump from 14 million to 23.6 million subscribers, which they say is likely due to the streaming-only package the company unveiled last November.

However, the company’s forecasted earnings weren’t as strong as some analysts anticipated. Wall Street predicted¬†$1.18 earnings per share while reports are saying the real number will likely be somewhere between 93 cents and $1.15.

A number of hurdles stand in Netflix’s way as it makes its transition away from physical DVD shipments into online streaming. Licensing content for its streaming service is expensive and will likely eat into costs, which the company expects to “increase substantially.”

Yesterday, we got wind that YouTube was going to make the jump into streaming online video, with a number of major motion picture companies already onboard. The rise of VOD could perhaps pose a threat to Netflix as it transitions its model away from physical inventories.

(via WSJ)

More on TIME.com:

Netflix Becoming Largest Subscription Entertainment Company

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