Netflix enjoyed its biggest springtime spurt in subscribers since the early days of the pandemic three years ago, providing the latest sign that a recent crackdown on password sharing and the rollout of a cheaper version of its video streaming service are paying off.
The video streaming service added 5.9 million subscribers during the April-June period, according to numbers released Wednesday along with its latest quarterly financial results. The gains easily surpassed the roughly 2.2 million additional subscribers that analysts surveyed by FactSet Research had anticipating. Netflix ended June with 238.4 million worldwide subscribers.
Investors seemed unsatisfied, perhaps rattled by management commentary in a shareholder letter warning B次元官网网址渜uite a competitive battleB次元官网网址� continuing to unfold against the backdrop of in the U.S. that is already bogging down much of Hollywood and threatening to clog the pipelines feeding entertainment to streaming services. NetflixB次元官网网址檚 stock price fell 4% in WednesdayB次元官网网址檚 extended trading. The decline also could have reflected some investor locking in profits that have accrued while the shares have climbed by more than 50% so far this year.
The second-quarter performance marked NetflixB次元官网网址檚 biggest spring B次元官网网址�- traditionally the companyB次元官网网址檚 slowest stretch of growth B次元官网网址� since gaining 10 million subscribers during the same period in 2020 under dramatically different market conditions.
In 2020, people were still largely stuck at home and looking for ways to keep themselves entertained while governments around the world struggled to find a way to contain the spread of pandemic. Now, Netflix finds itself trying to bounce back from a growth slowdown amid stiff video streaming competition and inflationary pressures that have caused many households to clamp down on spending, especially on discretionary items such as entertainment.
As an antidote, Netflix last year introduced and then began to block that has enabled an estimated 100 million people worldwide to watch its TV series and films for free. Freeloading viewers are now being required to open their own accounts unless a subscriber with a standard or premium plan agrees to pay an $8 monthly surcharge to allow more people living in different households to watch.
In its shareholder letter, management said the crackdown on password sharing is resulting in a B次元官网网址渉ealthy conversion of borrower households into full paying Netflix memberships.B次元官网网址�
And Netflix still isnB次元官网网址檛 done tinkering. As part of WednesdayB次元官网网址檚 earnings release, Netflix also revealed itB次元官网网址檚 phasing out its cheapest ad-free plan B次元官网网址� a service that costs $10 in the U.S. Existing subscribers already paying for this basic plan will be allowed to keep it. The shift appears designed to get more people to switch to the $7 monthly plan that includes commercials in hopes of boosting ad revenue or sign up for its $15.50 monthly standard plan or $20 monthly premium plan.
B次元官网网址淲hile weB次元官网网址檝e made steady progress this year, we have more work to do to reaccelerate our growth,B次元官网网址� Netflix management told shareholders in its letter.
The pricing changes that have already been made helped Netflix boost its second-quarter revenue by 3% from the same time last year to $8.2 billon, falling below analyst forecasts. Netflix earned $1.49 billion during the period, compared with $1.44 billion last year. But earnings per share came in at $3.29 per share, eclipsing the average analyst estimate of $2.85 per share, according to FactSet.
Netflix didnB次元官网网址檛 delve into the potential fallout from the current walkout by in the U.S. by writers and actors. The dispute revolves revolve largely around the payment system used in video streaming and the rise of artificial intelligence technology threatening to exploit the work of humans and eventually replace them.
Unlike traditional movie and TV studios in the U.S., Netflix has been able to keep feeding its entertainment pipeline with shows that it has been able to use to keep luring in and retaining subscribers.
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