International Finance

Netflix password crackdown fuels subscriber surge amid poor quarterly results


Video streaming behemoth Netflix has now seen a surge of new users joining the platform, following the crackdown on password sharing.

The company had over 238 million subscribers by the end of June 2023, an increase of 5.9 million from March.

The numbers exceeded expectations and came as a result of the company’s attempts to jump-start growth after experiencing significant subscriber losses in the spring.

The leading streaming service has also become the first of the major media and technology businesses to release its most recent quarterly earnings.

The industry has recently been battered by strikes by the writers’ and actors’ unions.

“This strike is not the outcome that we wanted,” co-chief executive Ted Sarandos said, while stating that the company hoped to reach a solution to this crisis as soon as possible.

In announcing its most recent quarterly earnings, Netflix stated that it generated USD 1.8 billion in profits on USD 8.3 billion in sales during the quarter.

As consumers who had previously shared the service for free decided to pay for their own memberships, analysts had anticipated Netflix added about 2 million additional households during the past three months.

Sarandos also asserted that the strike over pay and the use of artificial intelligence (AI) is anticipated to have a significant impact on the entertainment industry in the days ahead. The strike has paused new seasons of popular international series and films like ‘Gladiator 2’ and ‘Mission: Impossible – Dead Reckoning Part Two’ as well as popular web series like ‘House of the Dragon’ and ‘The Last of Us’.

According to analysts, Netflix is more prepared to withstand the strike than its traditional media competitors. For the first time in its existence, the company saw subscriber losses in 2022. Since then, it has started to gain subscribers once more, and at the beginning of 2023, it declared a crackdown on password sharing.

However, Netflix’s latest quarterly results have disappointed investors, resulting in the video streaming platform’s shares going down by as much as 10% to USD 430.41 in extended trading. The stock had risen 62% at the beginning of 2023.

While Netflix grew its subscriber base by 8%, sales rose just 2.7% to USD 8.19 billion, thereby missing the analysts’ projections. Netflix also generated less revenue per customer. The company expects sales of USD 8.52 billion in the third quarter Of 2023, compared with the USD 8.67 billion average of Wall Street estimates.

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