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Ahead of Netflix Earnings: Watching Streaming Subscriber Numbers

Netflix
AP
Netflix

When Netflix reports quarterly earnings after the bell, investors should focus on U.S. streaming subscriber numbers.

Even more than earnings or revenue, it’s that number of additions to its core service that’ll indicate whether the company is successfully moving past its disastrous price hike when it split its streaming and DVD rental businesses last summer. After alienating – and losing—subscribers, the service has finally returned to growth mode, with its stock up 48 percent year to date, while it’s down 57 percent over the past twelve months. (Track Netflix stock here)

The question now—just how much it’s managing to grow streaming subscribers.

And that raises additional questions on the cost side: how much is it spending in marketing to acquire those customers? And how much are costs for streaming content rising? Expect plenty of questions on these costs on the earnings call.

Wall Street expects Netflix to report $866 million in revenue, 21 percent more than the year-ago quarter. But earnings per share are expected to swing from a profit of $1.11 a year ago to a loss of 27 cents, as the company invests in international growth.

In his quarterly letter to shareholders we can expect CEO Reed Hastings to address rising competition from a slew of new players. In past quarters Hastings has said that Netflix’s biggest competition is HBO Go from Time Warner . But now he’s looking at a much wider array of rivals, many of which undercut Netflix on price. Comcast offers streaming video through Streampix to many of its subscribers. Verizon is teaming up with Redbox for a streaming video option. Amazon offers streaming to Amazon Prime subscribers, and Dish has an unlimited streaming service as well.

While Netflix tries to fend off these rivals here in the US it’s expanding overseas where it doesn’t have any of those legacy PR issues—it’s only offering streaming, rather than DVD rentals. It’s already rolled its service out in Latin America, the UK and Ireland. We’ll see if the company indicates where it’ll bring its service next.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.