adminNEW YORK. – A burst of people signed up for Netflix this spring, after the streaming giant cracked down on password sharing.
The company ended June with more than 238 million subscribers, adding 5.9 million members since March.
That was bigger than expected and follows efforts by the company to re-ignite growth following unusual subscriber losses last spring.
It is also facing challenges from ongoing strikes in the US by writers and actors.
Netflix said it would spend less on content this year than expected as a result of the walkout – the industry’s biggest in six decades, while boss Ted Sarandos said “we need to get this strike to a conclusion”.
“This strike is not an outcome that we wanted,” he said.
He said the company was committed to reaching an “equitable” agreement that helped the industry move into the future.
But he added: “We’ve got a lot of work to do.”
Netflix has been wrestling with a sharp slowdown in growth since the pandemic, as competition heats up, households grapple with rising costs and it reaches what analysts see as saturation point in some of its biggest markets.
Netflix said few people had cancelled as a result of the password changes and it believed the programme would fuel similar subscriber gains in the months ahead.
It has estimated that more than 100 million households share passwords in breach of its official rules.
“While we’re still in the early stages, we’re seeing healthy conversion of borrower households,” the company said in a quarterly update to investors. “Now that we’ve launched paid sharing broadly we have increased confidence in our financial outlook.”
Paolo Pescatore, analyst at PP Foresight, said the subscriber gains were robust and a “strong endorsement” of Netflix’s strategy.
Despite the subscriber gains, the US$8.18bn (£6.32bn) in revenue Netflix reported disappointed investors, rising just 2.7 percent from last year.
Profits were US$1.49bn.
Membership of its ads plan “nearly doubled” from March – though from a “small base”, the company said.
“Netflix needs to squeeze as much juice as it can from different avenues, given a recent lack of price increases could suggest that inflation is starting to bite Netflix’s ability to crank up its subscription price, as households look to trim their spending,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Shares, which have surged 60 percent this year amid investor enthusiasm for the company’s plans, dipped in after-hours trade. – BBC.
Mathew Masinge
Online Reporter