Netflix Inc on Tuesday said that its number of subscribers hit a record 232.5 million in the first quarter of the year and that its nascent ad-supported tier was faring well.
The streaming television giant reported a quarterly profit of US$1.3 billion, in line with expectations, but said it had delayed a broad crackdown on sharing of account passwords “to improve the experience for members.”
Netflix said it expects to begin rolling out its options for paid password sharing this quarter instead.
Photo: AFP
That means some membership and revenue benefits resulting from the move were postponed, Netflix said in a letter to shareholders.
The company has dabbled with “borrower” or “shared” accounts in a few markets, but plans to roll them out in the US and elsewhere this month, Netflix co-chief executive officer Greg Peters said in a streamed earnings interview.
Netflix said it is taking time to make sure subscribers have seamless access to the service away from home or on multiple devices.
“We learned from this last set of launches about some improvements we can do,” Peters said. “It was better to take a little bit of extra time to incorporate those learnings and make this transition as smooth as possible for members.”
While a new ad-subsidized subscription tier at Netflix is in its early days, engagement is above initial expectations and Netflix has seen “very little switching from our standard and premium plans,” it said.
Market tracker Insider Intelligence forecast that Netflix would bring in US$770 million in ad revenue from the new tier this year and that revenue figure would top US$1 billion next year.
As growth at Netflix cooled last year, the Silicon Valley-based streaming company focused on creating a lower-priced subscription tier with advertising.
Netflix also set out to nudge people watching for free with shared passwords to begin paying for the service without alienating subscribers.
“This account-sharing initiative helps us have a larger base of potential paying members and grow Netflix long term,” Netflix co-CEO Ted Sarandos said.
For the first time ever, US adults would spend more time this year watching digital video on platforms such as Netflix, TikTok and YouTube than viewing traditional television, Insider Intelligence has forecast.
Netflix and YouTube are “neck and neck” leaders when it comes to digital video audience attention, the market tracker said.
Netflix said it plans to continue spending about US$17 billion annually on shows and films, with that amount perhaps climbing after next year.
“Netflix subscriber growth shows that the streaming wars are still on,” Third Bridge Group analyst Jamie Lumley said. “The company is ahead of where it was this time last year, but still clearly facing the pressure from all the players in this crowded space.”
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