Netflix The media streaming service’s subscriptions have increased by nearly 6 million in the wake of a crackdown on password sharing, it said on Wednesday.
According to the earnings release, the streaming giant ended the recently concluded quarter with a total of 238 million subscribers and a profit of $1.5 billion (roughly Rs. 12,309 crores).
The surge in subscribers comes at a time when the US entertainment industry has been hit by a writers’ and actors’ strike, but analysts say Netflix is better positioned than its rivals to weather the storm.
“We are constantly at the negotiating table with everyone across the industry,” Netflix co-chief executive Ted Sarandos said during an earnings presentation.
“We need to see this strike through to a conclusion so we can all move on.”
Netflix’s $8.2 billion (roughly Rs. 67,290 crores) in sales in the April to June period came in below expectations as revenue fell more than 8 percent in after-hours trading on Wall Street.
Netflix in May expanded its crackdown on users sharing passwords with people other than their closest family as it seeks to shore up revenue after a tough period last year.
Earlier this year the company complained that more than 100 million households were sharing accounts on the service.
Louis Nevellier, chief investment officer at Nevellier & Associates, said of Netflix, “Let’s face it, password crackdowns are working.”
“I was very happy with the results; I think the increase in subscriber numbers has been a factor in their success.”
The company said in its earnings statement that this policy will be extended to all its markets across the globe.
To convert non-paying users, Netflix has introduced “borrower” or “shared” accounts, in which customers can add additional viewers or transfer viewing profiles to new accounts for a higher price.
Netflix launched an ad-subsidized offering around the same time as the action, and on Wednesday ended its lowest-priced ad-free plan, which costs $10 (roughly Rs. 800) per month in the US.
“The decision to cut its base tier is an attempt to boost advertising by widening the price difference between its ad and non-ad tiers,” said Ross Benes, principal analyst at Insider Intelligence.
The Netflix ad-supported subscription is available for $7 (roughly Rs. 600) monthly in the United States.
“Building an advertising business from scratch is not easy and we have a lot of hard work ahead, but we are confident that over time we can grow advertising into a multibillion-dollar incremental revenue stream,” Netflix said in a letter to shareholders.
Baines estimates that Netflix will generate $770 million (roughly Rs. 6,318 crores) in advertising revenue in the US this year and more than $1 billion (roughly Rs. 8,206 crores) by 2024.
“As Netflix’s focus on password sharing increases, so will the pressure to increase ad revenue,” Benes said.
“As the service’s subscriber base plateaus in more countries, Netflix will focus on moving price-sensitive freeloaders to its affordable ad-supported plan.”
actors on strike
The earnings report came as Netflix and other film and television producers saw production halted due to an actors’ and writers’ strike in the United States.
“The stock price is down a bit after the market; there’s concern that they’ll run out of material because of the Hollywood strike,” Nevelier told AFP.
Members of the Screen Actors Guild (SAG-AFTRA) have joined writers who have been on strike for weeks, leading to the first industry-wide walkout for 63 years and effectively shutting down Hollywood.
Third Bridge analyst Jamie Lumley said: “Our experts say Netflix is best positioned to withstand the strike compared to competitors, but it could start to feel the pressure if its content pipeline becomes increasingly strained.” Can do.”
Sarandos said on an earnings call in April that the company has a “very strong slate of releases” and a large base of upcoming movies and shows from around the world that will help it weather the strike.
“We will have more returning seasons this year than any other streamer,” Netflix shared a list with shareholders. virgin river,