Netflix in Canada: Small profits, mild expectations
Netflix letter to shareholders, July 24, 2012
Our Canadian service continues to grow well – in both subscribers and hours viewed. Similar to trends in the US, Q2 median hours viewed per member were up year-over-year in Canada. We have movies in the first pay TV window from Paramount and Fox and our members are currently enjoying hit films like “Rise of the Planet of the Apes”, “Mr. Popper’s Penguins” and “Kung Fu Panda 2”. As in the US, the first four seasons of “Breaking Bad” and all six seasons of “Lost” are setting viewing records in Canada for us. We achieved a small contribution profit in Canada in Q2 and expect to remain profitable in this market going forward, as we manage our content and marketing expenses to grow more slowly than members and revenue. We intend to steadily increase our contribution margin in much the same way as we are doing for our US streaming business.