Netflix reports 1.75M new subscribers, to extend password-sharing crackdown
Netflix posted its latest financial results, revealing an increase in revenue and paid memberships for the January-March period this year. The company was pleased with the results and announced that the “paid sharing” feature, which is essentially a crackdown on password sharing, yielded pleasing results in its trial markets of Canada, New Zealand, Spain, and Portugal. As such the company plans to roll it to more markets in Q2.
Revenue grew 4% on a yearly basis, which was expected, per the beginning-of-quarter guidance. Operating income declined in Q1 2023, compared with the same period last year, as “ongoing expense management and timing of hiring and content spend” affected the bottom line.
The outlook for the rest of the financial year is mixed. Because of the delayed implementation of paid sharing to more markets, some of the membership growth and revenue benefit will move to Q3 instead of fitting into Q2. Operating profit and revenue are expected to remain flat or slightly down, due to currency volatility.
Regarding engagement, Netflix proudly said it, alongside YouTube, is the clear leader in the streaming market, even if streaming is still a minor part of viewing content in every country. The platform named its most successful productions: Outer Banks S3, You S4, Ginny & Georgia S2, and new movies and series like the Oscar-winning All Quiet on the Western Front and Too Hot To Handle Germany.
Netflix decreased prices in India in December 2021. It was so impressed with the overall results, leading to improved engagement, that it adapted prices in the other 116 markets it is currently operating in Q1. While the change brought down a 5% decrease in FY ‘22 revenues, the company believes the increased adoption in these markets will help offset that in the longer term.
The new ads plan is already bringing people on board in the United States, and Netflix is expanding it to Canada and Spain starting today.
The company is aware that clamping down on account sharing might see “a cancel reaction”, as it was during the demo run in Latin America, but is confident many will activate their own accounts and current member will use the option to add “extra member”.
Finally, the report marks the discontinuation of a once-core feature - the company DVD business. Since 1998, DVD Netflix has been offering DVD-by-mail rental service with free shipping both ways, but that is stopping later this year. The final shipments will be sent on September 29, and Netflix thanked its employees that worked on “building the booster rocket that got streaming to a leading position”.
