The tightening of the rules concerning the sharing of passwords has finally paid off: Netflix now has more than 238 million subscribers, including 5.89 million added in the second quarter, an unexpected jump for the streaming platform.
The Californian group, which, like its competitors, is currently undergoing a major strike by actors and screenwriters in the United States, made $1.5 billion in net profit from April to June, according to its results press release published on Wednesday July 19. This figure also exceeded market expectations.
Netflix has since May forced users in more than 100 countries to pay to add profiles to their account, instead of sharing their credentials for free, as many did before. “Revenue in each region is now higher than before the change, with already more subscriptions than cancellations”, the company said. The policy of paid sharing of user accounts will be immediately extended to almost all countries where the service is present.
To raise the bar after a difficult 2022, Netflix wants to generate more revenue from each user. The cheapest subscription formula without advertising thus disappeared on Wednesday in the United States and the United Kingdom. “If you are currently subscribed to the “Basic” offer, you can keep it until you change your plan or cancel your subscription”specifies a message to users.
“Raise the pressure”
Viewers in these two countries, like those in Canada, now have the choice between a formula with advertising (at 7 dollars per month in the United States) and two more expensive subscriptions, without ads (15.5 and 20 dollars). . They also have to pay an additional $8 per additional user every month.
“Netflix will increase pressure on password sharing and ad revenue growth”commented Insider Intelligence’s Ross Benes. ” It is not a coincidence. As the service’s user base stagnates in a growing number of countries, the group seeks to switch “parasitic” users to its formula with ads. » This research firm estimates that Netflix will generate $770 million in advertising revenue in the United States this year, and more than a billion in 2024.
The ad-supported subscription launched in November had nearly 5 million monthly active users worldwide as of mid-May, according to Netflix (a different number from subscriber counts). “Since the beginning of the year, our user base with ads has more than doubled”Co-CEO Greg Peters said at the time. “On average, more than a quarter of new subscribers choose this formula in the countries where it exists”.
“Building an advertising business from scratch is not easy and we still have a lot of work to do, but we believe that over time it will be worth billions of dollars”assured the company on Wednesday in the press release.
Strike in Hollywood
Netflix posted $8.2 billion in revenue in the second quarter, slightly less than analysts expected. Its stock lost more than 5% in electronic trading after the closing of the New York Stock Exchange.
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Analysts “fear that the platform will run out of content because of the strike in Hollywood”notes Louis Navellier, investment director of a consulting firm of the same name. “But what matters at Netflix is user growth. And the password trick works. They converted the try”he told Agence France-Presse (AFP).
In addition, actors and screenwriters have gone on massive strike in the United States, causing the worst paralysis of the sector for more than 60 years. On Friday, hundreds of them marched in front of a Netflix building in Hollywood, but also elsewhere and in front of other studios and streaming services like HBO, Amazon and Paramount.
The two trades are demanding an increase in their remuneration, at half mast in the era of streaming. They also want to obtain guarantees concerning the use of so-called generative artificial intelligence, to prohibit the latter from generating scripts or cloning their voices and images.
“We had hoped that we would have reached an agreement at this stage”, co-chief executive Ted Sarandos lamented at the analyst conference on Wednesday. He mentioned that having grown up with an electrician and trade unionist father, he was aware of the “financial and emotional burden” what do strikes mean for families and said he was “sure that no union took this decision lightly. »
In April, he said that if the strike did take place, Netflix had enough “movies and programs from around the world (to) hold out for a long time. »
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