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The video streaming giant Netflix has boosted its global subscribers by 16.5% to 277.65 million, resulting in a 44% profit surge to $2.15 billion.
These numbers surpass Wall Street’s expectations of the firm for the second quarter of 2024. The 16.5% increase in subscribers equates to a 17% year-on-year increase in revenue and a 44% increase in profits.
Netflix said the growth can be attributed to the ongoing benefit from its recent crackdown on password sharing as well as recent original titles proving popular.
As a result of the success of Netflix’s strategy to mitigate free sharing and convert these users into paying subscribers, Disney+ has made its own plans to enact stricter password-sharing policies in the hope of driving growth.
“We’re clearly seeing healthy organic growth in the business, but we’re also continuing to get better and better at translating improvements in our service into business value, including getting better and better at converting unpaid accounts,” said Netflix’s CFO Spencer Neumann to analysts on Thursday, adding “On the paid member front, we’re also probably benefiting from that attractive entry point in terms of price point and feature set for our ads plan.”
Netflix warns this growth will not continue into quarter three
As the impact of the password-sharing clampdown declines, so will the corresponding surge in revenue. Netflix is warning that quarter three paid net additions will be lower year-on-year because of this.
In addition, they expect global average revenue per paid member to be roughly flat year-on-year in quarter three due to “ongoing [foreign exchange] headwinds and plan and country mix.”
Netflix is now looking at how it can continue to grow its user base, saying in a quarterly shareholder letter that “Our biggest opportunity is winning a larger share of the 80%+ of TV time (primarily linear and streaming) that neither Netflix nor YouTube has today. If we execute well — better stories, easier discovery and more fandom — while also establishing ourselves in newer areas like live, games and advertising, we believe that we have a lot more room to grow.”
In order to drive this, Netflix has recently redesigned its home screen intending to make it easier for users to find content they want to watch. In addition, the company is continuing to expand Netflix Gaming, with new titles frequently being added for customers to play.
Featured image credit: generated by Ideogram
