Netflix has released its latest financial results, revealing an increase in revenue and paid subscriptions for January-March this year. The company was pleased with the results and announced that the “paid sharing” feature, which is essentially a crackdown on password sharing, has yielded satisfactory results in test markets of Canada, New Zealand, Spain and Portugal. Therefore, the company plans to roll it out to more markets in the second quarter.
Revenue grew 4% year over year, as expected, according to early quarter guidance. Operating profit declined in the first quarter of 2023, compared to the same period last year, as “operating expense management and time-to-hire and content spend” impacted profits.
The outlook for the remainder of the financial year is mixed. Due to the delayed rollout of paid sharing in more markets, some of the membership growth and revenue benefits will roll over to Q3 rather than Q2. Operating profit and revenues are expected to remain stable or slightly down due to currency volatility.
When it comes to engagement, Netflix has proudly stated that, together with YouTube, it is the undisputed leader in the streaming market, even though streaming is still a minor part of viewing content in every country. The platform named its most successful productions: Outer Banks S3, You S4, Ginny & Georgia S2 and new films and series such as All Quiet on the Western Front and Too Hot To Handle Germany, Oscar winners.
Netflix reduced prices in India in December 2021. It was so impressed with the overall results, which led to higher engagement, that it adjusted prices in the other 116 markets it currently operates in in the first quarter. While the change did reduce FY ’22 revenues by 5%, the company believes that increased adoption in these markets will help offset that in the long run.
The new advertising plan is already engaging people in the US, and Netflix is expanding it to Canada and Spain starting today.
The company is aware that blocking account sharing could see “an unsubscribe reaction,” as it did when running demos in Latin America, but is confident many will activate their accounts and the current member will use the option to add “extra member”.
Finally, the report marks the disruption of a once-critical feature: the company’s DVD business. Since 1998, DVD Netflix has offered a mail-in DVD rental service with free shipping both ways, but this will end later this year. Final shipments will be sent out on Sept. 29, and Netflix thanked its employees who worked on “building the booster rocket that has propelled streaming to a leadership position.”
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