Streaming giant, Netflix has announced a profit in excess of $2.3 billion in the first quarter of 2024. This was revealed in a letter sent to its shareholders containing a report of the company’s activities during the quarter. According to the letter, the profit numbers indicate an impressive 14.8 per cent year-on-year growth.
Netflix also reported that it gained 9.3 million users in the quarter under review. The new addition brings the total number of its subscribers to almost 270 million. The company also posted an overall revenue of $9.37 for the quarter which represents a 15 per cent year-on-year increase.
Despite this impressive announcement, the company’s shares appear to be tanking on the NASDAQ. According to a BBC report, Netflix shares dropped 5 per cent following the announcement. The report attributed this to Netflix’s decision to stop reporting subscriber numbers from next year.
According to the report, some investors saw this decision to stop reporting subscriber numbers as a sign that Netflix’s wave of customer growth may be coming to an end. It also noted that other technology giants such as Facebook parent Meta and social media platform X, formerly Twitter, also stopped reporting monthly active user numbers as growth slowed. It said decisions such as that raise questions about the growth prospects of the company’s subscriber base.
Indeed, the company itself lent some credit to these doubts because when announcing the decision, it said “In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential“.
It added that today, subscriber numbers have become “just one component of our growth”, asking investors to focus on its profits and revenue.
Netflix subscriber growth attributed to crack down on password sharing
The first quarter report noted that the early success was attributable to Netflix’s crackdown on password sharing. Starting in February 2023, the streaming giant started cracking down on users who arbitrarily share passwords with other users.
“We value our members and recognise that they have many entertainment choices. A Netflix account is intended for one household,” the streaming company said at the time. It also introduced an additional fee for users if they must share their password as well as a limit for sharing and predicted that its revenues and growth would even be boosted further by the plans to charge such customers.
Following the successful crackdown on password sharing, in Q2 2023, Netflix recorded a 2.7 per cent increase in revenue, posting $8.2 billion and an operating profit of $1.8 billion, which the streaming giant said was in line with its forecast. The platform also reported 5.9 million new users in the quarter.
It was the same story in Q3 and Q4 2023, with revenues hitting $8,5 billion and $8,8 billion representing 7.8 per cent and 12.5 per cent growths respectively. Looking forward, the streaming giant is projecting a revenue growth of 14. 8 per cent in the second quarter of 2024, expecting to hit a revenue of $9.5 billion for the quarter.
To achieve this, the company intends to improve the variety and quality of entertainment with more, great TV shows and movies, a stronger slate of games and must-watch live programming. It also hopes to innovate in its product and marketing so fans can more easily discover, immerse themselves in and talk about the stories they love, fueling fandom and the Netflix Effect.
Finally, it intends to tap into additional revenue and profit pools in particular scaling ads to become a more meaningful contributor to our business in ‘25 and beyond.
“We have built a hard-to-replicate combination of a strong slate, superior recommendations, broad reach and intense fandom, which drives healthy engagement on Netflix. Improvement in these key areas is the best way to delight our members and continue to grow our business,” it says.
See also: Showmax overtakes Netflix as Africa’s biggest streaming platform with 39% share
Technext Newsletter
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!
