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Netflix appears to be benefiting from its password-sharing crackdown and recent ad focus, while the service plans to stop reporting its subscriber numbers next year.
Netflix has continued to boost its position after its password-sharing crackdown, as the company’s profits and subscriber count have grown significantly.
The streaming giant’s revenue was up 15pc in the first quarter of 2024 compared to the same period last year, while its operating income grew by 54pc. This is a large boost compared to the start of 2023, where Netflix’s revenue grew by less than 4pc.
Net income for the latest quarter was more than $2.3bn, a growth of more than $1bn compared to the start of 2023. Netflix also expects its revenue to hold steady in the next quarter, while its net income is expected to decline to $2.06bn.
Meanwhile, Netflix’s paid subscriptions continues to grow steady and reached just under 270m, an increase of more than 9m subscribers from the last quarter and an increase of 16pc compared to the same period last year.
The streaming service has had a number of unique changes in recent years that were intended to boost revenue and subscriber figures. One of these was a crackdown on people sharing accounts between multiple households – which Netflix focused on after a record subscriber loss in one quarter of 2022.
Netflix also launched a cheaper ad-supported subscription option in various countries in order to draw in more users. The streaming giant was against the idea of adverts on its service for years, but had a change of heart in 2022 after it reported a loss of around 200,000 subscribers – the first time Netflix had lost subscribers in a decade.
“Our two priorities in ads are to scale our member base and to build out our capabilities for advertisers,” the company said in its quartlery announcement. “We made progress on both fronts in Q1.”
Meanwhile, Netflix said it will stop reporting membership numbers in 2025, as it claims the company has developed new revenue streams and memberships are “just one component of our growth”.
“We’re focused on revenue and operating margin as our primary financial metrics – and engagement as our best proxy for customer satisfaction,” Netflix said. “In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow.”
Forrester’s VP research director Mike Proulx said Netflix remains in the lead of the “streaming marathon” each quarter.
“The company made material increases in its overall user base, its ad tier and, most notably, its profit margin – something none of the other streaming services can currently boast about,” Proulx said. “Advertisers care about scale and reach, and Netflix is demonstrating continued and steady growth to its ad tier.”
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