- Mariko Oi & Natalie Sherman
- bbc news
Netflix said its profits soared in the first three months of the year, thanks in part to a crackdown on password sharing.
The streaming giant announced it added 9.3 million customers in the first quarter, bringing its total subscriber count to nearly 270 million.
The company also announced that first-quarter profits jumped to more than $2.3 billion (£1.85 billion).
However, the company will stop reporting major subscriber numbers starting next year.
Announcing the decision, the company said in a letter to shareholders: “In our early years, when we had little sales or profits, membership growth was a strong indicator of our future potential.”
He added that subscriber numbers are now “just one component of our growth” and urged investors to focus on the company’s profits and revenue.
First-quarter sales rose nearly 15% year over year to $9.37 billion.
The company also credits its contributions to the “drumbeat” of hit songs such as the crime drama “Griselda.”
Some investors saw the surprise decision to stop reporting subscriber numbers as a sign that Netflix’s wave of customer growth may be coming to an end.
Simon Gallagher, a former Netflix director and now head of entertainment investment company SPG Global, told the BBC’s Today program that while the numbers showed “a very, very strong performance”, this might not last for long. He said he could not.
“This is a clear tailwind from the crackdown on password sharing. We saw it last quarter, it’s continuing this quarter, it’s going to continue for another quarter or two, but it’s going to be over by this time next year. There is an expectation of being deaf.”
A former Netflix representative said the company wants “people to move away from obsessing over subscriber numbers.”
But the move to stop sharing subscriber numbers has caused confusion among U.S. analysts.
Jamie Lumley of research firm Third Bridge wrote that the decision raises “questions about the growth prospects of Netflix’s subscriber base.”
Other tech giants, including Facebook’s parent company Meta and social media platform X (formerly Twitter), also stopped reporting monthly active users as growth slowed.
Netflix stock has risen more than 30% since the beginning of the year and is nearing its all-time high of 2021. However, the stock fell by nearly 5% after the announcement.
“The streaming market is notoriously volatile and it’s an uphill climb to keep customers’ money flowing,” said Sophie Land-Yates, chief equity analyst at stock trading platform Hargreaves Lansdown. Ta.
“One area where Netflix excels is its original content slate, which is known to be a great retention tool when compared to repurposed shows and movies.”
The last time Netflix increased the price of its popular “Standard” plan was in 2022.
The move was followed by an unusual decline in subscribers that surprised investors and fueled concerns that Netflix was losing its dominance over the industry it had pioneered.
Shortly after, the company announced it would reignite growth by cracking down on password sharing and launch a new plan that would offer cheaper advertising.
The company has expanded into areas such as sports and video games, while continuing to license material from rival media companies looking for ways to increase profits.
Analysts said the company also benefits from its global footprint, which has helped it maintain a relatively strong pipeline of new shows despite the strikes that rocked Hollywood last year.