A record-breaking number of Netflix subscribers, coming password crackdown
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Salma Hossein
- . April 19, 2023
- . Update: April 19, 2023 8:39 pm
On Tuesday, Netflix announced that its subscriber base reached a record high of 232.5 million in the first three months of the year and that its newly launched ad-supported tier was doing well.
The leading provider of streaming television announced a $1.3 billion quarterly profit, in line with estimates, but claimed to have postponed a broad crackdown on the sharing of account passwords “to improve the experience for members.” Instead, Netflix stated that it plans to introduce its options for paid password sharing this quarter.
According to Third Bridge analyst Jamie Lumley, “It’s clear that the company wants to manage any fallout from the new strategy.”
According to a letter from Netflix to shareholders, this means that some members and financial benefits associated with the move have been delayed.
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Netflix has experimented with “borrower” or “shared” accounts in a few markets, but co-chief executive Greg Peters said in a streamed earnings interview that the company plans to roll them out in the US and other countries this month.
According to Netflix, it will take some time to ensure customers can access the service easily while away from home or on different gadgets like tablets, TVs, or smartphones. “We learned about some improvements we can do from this last set of launches,” Peters said.
“It was better to take a little more time to integrate those learnings and make this transition as easy as possible for members,” the author said.
While Netflix’s new ad-supported subscription tier is still in its infancy, engagement is already exceeding initial projections, and the company reports “very little switching from our standard and premium plans.”
According to market watcher Insider Intelligence, Netflix will generate $770 million in ad revenue from the new tier this year, and that amount will surpass $1 billion the following year.
Last year, as Netflix’s growth slowed, the Silicon Valley-based streaming service concentrated on developing a more affordable subscription tier with advertising.
In addition, Netflix wanted to encourage users who were using shared passwords to watch content for free to start paying for the service without alienating current users.
“This account-sharing initiative helps us have a larger base of potential paying members and grow Netflix over the long term,” co-chief executive Ted Sarandos said.
Future of TV – According to Insider Intelligence, US adults will watch more digital video this year than traditional television for the first time. Netflix, TikTok, and YouTube are the platform for it.
For the first time, “linear TV” is predicted by the market tracker to make up less than half of daily viewing.
“This milestone is driven by people spending more and more time watching video on their biggest and smallest screens, whether it’s an immersive drama on a connected TV or a viral clip on a smartphone,” said Insider Intelligence principal analyst Paul Verna in a statement.
According to Insider Intelligence, when it comes to digital video audience attention, Netflix and YouTube are “neck and neck” leaders.
Netflix planned to keep spending roughly $17 billion a year on shows and movies, with a possible increase after the following year.
“Netflix subscriber growth shows that the streaming wars are still ongoing,” analyst Lumley said.
“The company is ahead of where it was at this time last year, but it is still obvious that all the players in this crowded space are putting pressure on it.”
