NEW YORK (TheStreet) - Netflix (NFLX) sees its top competitor as Time Warner's (TWX) HBO and boosting its original content offerings is how the streaming service plans to best the Game of Thrones-producing network.
"We are approaching 50 million global members, but that is far short of HBO's 130 million. We are eager to close the gap," Netflix's management writes in a letter to shareholders on Monday announcing first-quarter earnings.
The Los Gatos, Calif.-based Netflix earned 86 cents a share on $1.27 billion in revenue for the March 31-ending quarter, as the company surpassed 35 million streaming subscribers, of which 34.38 million are paying. Streaming margins hit 25.2% in the first quarter. Analysts surveyed by Thomson Reuters were expecting the company to earn 83 cents a share on $1.266 billion in revenue for the first quarter.
Netflix also said that it plans to raise prices for new members, to the tune of $1 or $2 depending on the country. "Existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period," the letter read. "These changes will enable us to acquire more content and deliver an even better streaming experience."
Which brings us back to the heart of the matter - the ever need for more and more content, specifically original content, so that Netflix users can "binge-watch" seasons in one weekend. So far, Netflix seems to be delivering. Reed Hastings, co-founder and CEO of Netflix, specifically noted on the conference call that when it comes to original content, "If we want to continue to expand ... We have to eventually increase prices a little bit."
"We are pleased with consumer reception to our early work, as demonstrated in a Morgan Stanley survey from March, showing that 17% of respondents viewed Netflix as the service that offered the best original programming, second only to HBO, and ahead of Showtime and Starz. To have achieved this recognition in our second year of original content creation is exciting and we are optimistic about building on our initial success," management said in the letter.