Netflix has nearly 270 million subscribers worldwide, after garnering more than 9 million additional subscriptions in the first quarter – much more than expected – but the streaming pioneer no longer wants to depend solely on this growth to stay in business. summit.
“We will obviously continue to increase the number of subscribers, but the overall growth of the company now has additional drivers, such as the optimization of subscription formulas, (…), advertising revenue and price adjustment based on added value,” Greg Peters, co-chief executive officer, said Thursday. “These levers constitute an increasingly important part of our economic model,” he added during a conference call after the publication of quarterly results.
Netflix prefers to talk about commitment
The group, which forecasts lower subscriber gains for the current quarter, has also announced that from next year, it will no longer disclose the number of new subscriptions every three months. Greg Peters explained that he wanted to focus on audience “engagement” measures (time spent watching content), because they “better” reflect the platform’s ability to retain and attract, and therefore generate “engagement, revenue and profit – our North Stars”.
In the first quarter, buoyed by its spectacular growth, Netflix achieved $9.37 billion in revenue and $2.3 billion in net profits, two results up year-on-year and also higher than forecasts. The platform had already started 2024 with great fanfare with 13 million additional subscribers gained during the holiday season, thanks in particular to its stricter policy on sharing accounts between users and its cheaper subscription with advertising.
Conquer advertisers
“Netflix continues to screw over its competitors,” reacted Ross Benes of Emarketer. “This indicates that password sharing was even more common than previously thought, as the service continued to turn parasitic viewers into paying users.” And it’s not over. Netflix is working on “ever more effective mechanisms to convert people”, assured Greg Peters, whether they are users who “borrow codes”, old subscribers or newcomers.
In this context of abundance, some analysts wonder why Netflix has planned to spend “only” $17 billion on content in 2024, instead of acquiring more broadcast rights to series produced by third parties, for example. example. The service “risks losing its spirit of innovation” if it becomes more selective in the production of content to save money, believes Ross Benes.
But Netflix must no longer only fight to attract and retain the attention of viewers, it must also convince advertisers, notes Mike Proulx, vice-president of Forrester. Most streaming platforms now offer a subscription plan with advertising, so “brands have more options,” underlines the research director.