Netflix started the new financial year with mixed financial figures and has postponed the global crackdown on account sharing. The streaming service actually wanted to take global action against sharing Netflix access with people outside of your own household at the end of the first quarter, but that is now planned for the second quarter of this year. Also, this fall’s DVD rentals will end what Netflix started 25 years ago.
In the first quarter of 2023, Netflix increased its revenue by 3.7 percent year-on-year to $8.16 billion. Operating profit fell 13 percent over the same period and is now $1.7 billion. The net profit fell by around 18 percent compared to the previous year to 1.3 billion dollars, as the company explains.
For the current quarter, Netflix expects revenue of $8.2 billion. That would be three percent more than in the same period last year. At the same time, however, operating profit and net profit are expected to continue to decline somewhat. The Netflix share price then initially collapsed by more than 10 percent, but immediately recovered after the market closed and regained the level of the previous day.
End of DVD rentals, fewer new customers
Besides that announced Netflix, to end its DVD rental business after around 25 years. Shipping by post was the original business model of the company founded in 1997. In the streaming age, however, it hardly played a role anyway. Netflix justified the end with the low use of the service. The last rental DVDs are scheduled to be sent out on September 29, 2023, after which it will be over.
In the streaming area, the market leader was able to increase its customer numbers by 1.75 million to 232.5 million paying user accounts in the first quarter. Experts had expected a much stronger increase. A year ago, Netflix was dwindling as Russia’s war caused subscribers to fall for the first time since 2011. The number of subscribers fell by 200,000 at the time, so the current increase in subscriptions prompts Netflix to speak of a “good start to 2023”. At the end of 2022, however, Netflix still had almost 7.7 million new subscriptions.
More new customers through sharing ban
Netflix promises more new customers from its action against account sharing. After Netflix has also banned account sharing in parts of Europe since February, initially in Spain and Portugal, this initiative should have been implemented worldwide at the end of the first quarter. This has now been postponed to the second quarter because Netflix claims it has “found opportunities for a better user experience”.
In the current quarter, however, broad action is to be taken against account sharing, including in the USA, as one of the Netflix bosses said sea US-Sender CNBC explained in discussions with investors. The experiences that the streaming service has had in other countries show that customers initially resist and cancel, but then slowly return and sign up for their own subscriptions.
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This would initially slow down customer growth, so that Netflix now only expects stronger growth in the third quarter. The streaming service cites Canada as an example. Netflix users with borrowed passwords from paying customers would later create their own accounts and create other users as additional users. Since the action against account sharing there in February, sales in Canada have grown more than in the USA.
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