Streaming video is hot again after Netflix surprised with better-than-expected third-quarter figures, sending the shares up 19% in after hours trading in the US this morning. The 19.5% jump in the shares lifted the company’s value by more than US$9 billion (which is more than all of News Corp US$7.9 billion value at the close this morning) to close to US$52 billion.

Netflix reported earnings of US$51.5 million, 75% higher than a year ago on revenues up nearly 32% to US$2.29 billion. That was better than forecasts (analysts in the US had been looking for another weak quarter from the streaming front runner, and the shares had fallen in recent weeks). So the streaming subscriptions beat forecasts. Netflix ended the quarter with 47.5 million domestic subscribers, up 370,000. International subscribers surged 3.2 million to 39.25 million.

Netflix said the rebound was due to “excitement around Netflix original content”. The company is on course to spend about US$5 billion to produce and license original content this year, and an additional US$6 billion next year. Amazon, Hulu and Netflix combined are spending in excess of US$10 billion or more a year on new content, or licensing it from other producers and sources. That makes the spending of the free-to-air and cable networks, such as HBO, look puny. It also helps explain why Seven West Media and Foxtel decided to pull the plug on the Presto streaming service.

While that decision will allow Foxtel to start its own streaming service built around a broader offer to its subscribers, it’s clear they can’t compete directly with Netflix, or Stan (Nine/Fairfax) for that matter. Nine and Fairfax have invested more than $100 million in Stan, but they face a big threat from Netflix and others. Netflix’s rebound also explains why Foxtel’s new service will be offering Netflix and other services. If you can’t beat ’em, join ’em. — Glenn Dyer