Netflix reported a significant increase in earnings for the first three months of this year. As the BBC writes, this is partly due to the struggle with the exchange of passwords between users.
The number of Netflix subscribers increased by 9.3 million in the first quarter, reaching a total of 270 million. The company's profits for this period reached $2.3 billion. Netflix's revenue for the first quarter increased by almost 15% year-on-year, reaching $9.37 billion. However, starting next year, Netflix decided to stop reporting the number of subscribers. In a letter to shareholders, the company explained that in the early stages of development, when revenues and profits were negligible, the growth of the subscriber base was a key indicator of future potential. Now Netflix believes that the number of subscribers has become only one component of growth, and urges investors to focus on earnings and in the company's revenue. Some investors saw this as a sign that a phase of rapid customer base growth might be coming to an end. Other tech giants, such as Facebook and X, also stopped reporting monthly active users as their growth slowed. In contrast, Netflix shares rose more than 30 % since the beginning of this year, approaching its peak in 2021.
The last price increase for Netflix's popular «standard» plan was in 2022. The move led to an unexpected drop in subscribers, unnerving investors and fueling fears that Netflix could lose its dominance in the industry it pioneered.
The company soon announced plans to revive growth by cracking down on password sharing and launching a new, low-cost, ad-supported plan.
In addition, Netflix is expanding into sports and video games, continuing to acquire licenses for content from competitors to increase revenues.
Earlier, Netflix decided to remove the cheapest ad-free subscription from its service.