In the first quarter of 2023, Netflix reported a significant increase in subscribers and revenue thanks to restrictions on the sharing of credentials between users.
Netflix's success
User growth
During the first three months of the current year, the subscriber base of the Netflix video service grew by 9.3 million , reaching a total of 270 million subscribers. The company earned $2.3 billion in revenue during that period.
Financials
Netflix revenue in the first quarter increased by almost 15% compared to the same period period last year, reaching $9.37 billion. However, starting next year, the company will stop publishing reports on the number of subscribers. As noted in the letter to shareholders, in the early stages of development, growth in the subscriber base was a key indicator of future potential, when revenues and profits were negligible. Currently, Netflix views subscriber numbers as just one component of growth, urging investors to focus on the company's earnings and revenue.
Investor reaction
Some investors saw Netflix's decision as a sign of the possible end of the phase of rapid growth of the client base Other tech giants such as Facebook and X have already taken similar steps, ceasing to report monthly active users due to slowing growth. Even so, Netflix shares are up more than 30% since the start of this year, approaching their 2021 peak.
Growth Strategy
In 2022, Netflix raised the prices of its popular "standard" plan, which led to an unexpected decline in subscribers. At the time, the company announced plans to revive growth by cracking down on password sharing and launching a new, low-cost plan with ads. In addition, Netflix is expanding its activities in sports and video games, continuing to buy licenses for content from competitors to increase revenues. Earlier, the video service decided to cancel the cheapest ad-free subscription.
Glossary
- Netflix is a leading global video streaming entertainment platform that offers a wide selection of series, movies and documentary content to watch on by subscription
- BBC (British Broadcasting Corporation) is the British state broadcasting company, which is the oldest national broadcasting service in the world.
- Facebook (now Meta) is one of the largest technology companies in the world, which develops software for social networks, messaging and other products.
- X (formerly Twitter) is a popular microblogging and social media publishing and messaging platform known as "Twitter" until its name change in 2023.
Link
- BBC: Netflix subscriber numbers jump as crackdown on password sharing pays off {{21}
- Netflix Shareholders Letter Q1 2024
Answers to questions
How does Netflix plan to continue to grow?
Will Netflix continue to report subscriber count?
How did the number of Netflix users change in the first quarter of 2023?
Has the fight against password sharing affected the growth of users?
What happened to Netflix stock in early 2023?
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Discussion of the topic – Netflix gains 9.3 million new users after crackdown on password sharing
Netflix reported strong growth in users and revenue for the first quarter of 2023. This is partly due to their efforts to combat credential sharing between users.
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Марія
Netflix's growth is impressive 🔥 9.3 million new subscribers in the quarter is a success! Although predictably, the reduction in password sharing encouraged many to sign up. Is this factor important to you or is the price more decisive?
Петро
Interestingly, Netflix refuses to report the number of subscribers. Perhaps this means that they have reached the peak of growth and will now focus on profits. For investors, this is an important signal 💰
Ганна
For me, price has always been the deciding factor. Switching to a paid plan after years of free sharing will hurt your wallet 😥 Although the quality of Netflix content is undeniable.
Джон
Well, as far as I'm concerned, the fight against password sharing was inevitable. Netflix is a business and they need to protect their revenue. Although I understand that this causes dissatisfaction among some users 🤷♂️
Ольга
It will be interesting to see how Netflix deals with subscriber churn after it stops reporting subscriber numbers. Perhaps they will focus on profits and quality of content 💎
Іван
That's an old bastard 😒 I'm telling you, all these new technologies and trends are ridiculous and pointless! Who even watches this Netflix? I'd rather go for a walk in the fresh air.
Софія
I love Netflix for their wide selection of content 👍 Games and sports is a great idea to expand the service. Although the struggle with password sharing was a little upsetting 😕
Андрій
In my opinion, Netflix is making the right move by focusing on profits. This will help them invest in new interesting projects and content 🎥 I'm looking forward to new series!
Емма
How about Netflix's advertising rate? It can be a good alternative for those who don't want to overpay. Although advertising is annoying 😒
Джон
Emma, I've already tried the promotional rate and it's a good way to save a few quid a month. Advertising is not as intrusive as I expected 🤷♂️
Ганна
I would love to try Netflix's promotional rate. My family loves their content, but the price of the standard plan is high. Previously, we used sharing 🙈
Марія
I wonder if other streaming services will follow Netflix's move to crack down on password sharing? This could become a general trend in the industry 🤔
Петро
In my opinion, this is natural. All of these companies are looking to maximize profits, so sharing passwords threatens their business model. Although it is, of course, not profitable for users 💸
Софія
I decided to take a family subscription to Netflix and share it with my friends 🙃 It will be cheaper for everyone, and we will support the service legally.
Андрій
Great idea, Sofia! 👏 Family rates are a smart compromise for those who want to enjoy Netflix content at an affordable price.