Global Courant 2023-04-19 04:06:38
Reed Hastings, co-CEO of Netflix, will attend the Milken Institute Global Conference on October 18, 2021 in Beverly Hills, California.
Patrick T Fallon | AFP | Getty Images
Netflix released mixed financial results on Tuesday and said it was pushing back the wide rollout of its crackdown on password sharing.
Netflix originally wanted the rollout to happen late in the first quarter, but on Tuesday it said it would happen in the second quarter.
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“While this means that some of the expected member growth and revenue benefits will decline in Q3 rather than Q2, we believe this will result in better outcomes for both our members and our business,” the company said in a statement. his press release.
The company said it saw subscriber growth in the international markets where it has already rolled out such initiatives.
Here are the results Netflix reported on Tuesday versus analyst estimates polled by Refinitiv:
Earnings per share: $2.88 versus $2.86 expected Revenue: $8.16 billion versus $8.18 billion expected
For the quarter ended March 31, Netflix reported earnings of $1.31 billion, or $2.88 per share, compared to $1.6 billion, or $3.53 per share, a year earlier. Revenue grew from $7.87 billion in the same period last year to $8.16 billion.
Shares of Netflix initially fell more than 10%, but mostly recovered in after-hours trading.
Netflix’s crackdown on password sharing is a major concern for investors. Late last year, the company said it would begin rolling out measures to let people who have borrowed other accounts create their own.
The company has said that more than 100 million households share an account, or about 43% of its global user base. That has affected his ability to invest in new content, according to Netflix. Both the ad-supported option and the crackdown on password sharing are designed to increase profits.
“The second quarter launch will be broad, including the US and most of our countries if we think about it from a revenue perspective,” co-CEO Greg Peters said on Tuesday’s earnings call. Peters compared the transition to paid sharing to that of rising prices: subscribers initially hesitate and cancel, then slowly come back and sign up for their own account.
In February, Netflix outlined password sharing guidelines in four countries: New Zealand, Canada, Portugal and Spain. The company said it would ask users in those countries to set up a “primary location” for their accounts, and would allow users to create up to two “sub-accounts” for those not in their country for an additional fee. home base living.
Netflix said on Tuesday it was pleased with its effort to reduce password sharing. In Latin America, the company said it saw cancellations after the news was announced, affecting near-term growth. But, Netflix added, those password borrowers would later activate their own accounts and add existing members as “additional members” accounts. As a result, the company said, it’s seeing more revenue.
Canada, likely to serve as a model for the US, has seen its membership grow thanks to the launch of paid sharing, and revenue growth has accelerated and is “growing faster than in the US”
The company said as it rolls out its paid sharing initiatives, it expects near-term engagement — which is measured by Nielsen for its ad-supported level — “likely to decline modestly.” Still, the company believes it will recover, as seen in international regions.
Expect an increase in sales
Netflix said it believes paid sharing will bring increased revenue in the future as it looks to improve its service. On Tuesday, Netflix said it expects to spend about $17 billion on content by 2024.
Co-CEO Ted Sarandos said Tuesday the company hopes to avoid a writers’ strike and talks with the Writers Guild of America continue.
“We respect the writers and WGA and we couldn’t be here without them. We don’t want a strike,” Sarandos said Tuesday. Still, Sarandos noted that if a strike were to happen, Netflix would have a solid lineup of TV and movies coming up.
Netflix noted on Tuesday that “competition remains intense because we compete with so many forms of entertainment.”
On Tuesday, Netflix said goodbye to what it started with: the DVD mailing business, where it would send the discs to customers in red envelopes. The company’s CEO, Ted Sarandos, said in a blog post that it would finally wind down the DVD business, which “continues to shrink.”
A year ago, Netflix had reported its first subscriber loss in a decade, sending its stock into a tailspin, as well as those of its media peers. The results pushed Netflix and its streaming rivals to focus on profit over subscriber numbers.
While Netflix wanted to increase its profits and subscriber base, it turned its focus to an ad-supported subscription and crackdown on password sharing.
Last November, Netflix unveiled its cheaper tier of commercials, which costs $6.99 per month. The ad-supported level came shortly after losing subscribers as streaming competition intensified.
Sarandos recently said that the company will likely offer multiple ad-supported tiers in the future.
Netflix’s ad-supported plan now has an average of 95% of the same content as what’s on its ad-free plans due to recent licensing deals, the company said Tuesday.
“We are pleased with the current performance and trajectory of our ad economy per member,” Netflix said Tuesday.
Peters added on Tuesday that Netflix was not prepared to announce or predict expectations regarding its ad-supported plan.
In some markets, Netflix has seen users change tiers after paid sharing was introduced, Peters said, though it was very “country-specific.”
The executives also spoke about the outage that prevented millions of people from watching the live broadcast of “Love is Blind” on Sunday.
Peters and Sarandos both said the company was “sorry it has disappointed so many people”.
Peters added that from a technical perspective, Netflix has the infrastructure to broadcast live, as it did with the Chris Rock comedy special in March. But that “a bug has been introduced” in improving the Chris Rock special. “We hate when these things happen, but we will learn from them,” Peters said.
