Internet video appears to be making Netflix less vulnerable to seasonal shifts than it had been when most of its subscribers used the service to rent DVDs. The company used to experience a slowdown during the summer months when many subscribers were on vacation or spending more time outside to take advantage of the longer days.
Breaking through 1 billion streaming hours in June suggests that pattern is changing now that most subscribers can watch a movie or TV show on the service anywhere they want at any time they want, as long as they have a device with an Internet connection.
As of March 31, Netflix had just 2.7 million customers who subscribed only to the DVD rental plan. About 19.1 million are streaming-only customers and the remaining 7.4 million get both.
Mahaney's report estimated that 35 percent of iPad owners watched a Netflix-delivered video in June, up from 30 percent in September. Netflix consistently ranks among the 20 most downloaded applications on the iPad.
As more Netflix subscribers embrace streaming, Mahaney expects the rate of customer cancellations to decline and the positive word-of-mouth to win over more households, especially those that own iPads and other tablet computers. He predicts Netflix's stock could rebound back to $130.
Pachter believes his fears about Netflix having to pay even higher licensing fees will pan out, forcing the company to either raise its prices or shoulder more losses. He expects shares of Netflix, which is based in Los Gatos, Calif., to fall as low as $45.