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Netflix: Profits rise after password sharing campaign

Netflix: Profits rise after password sharing campaign
  • Written by Mariko Uy and Natalie Sherman
  • BBC News

Comment on the photo, Sofia Vergara plays Griselda Blanco in the six-part Netflix series

Netflix says its profits rose in the first three months of this year, partly due to a crackdown on password sharing.

The streaming company said it added 9.3 million customers in the first quarter, bringing the total number of subscribers to nearly 270 million.

The company also said its first-quarter profits jumped to more than $2.3bn (£1.85bn).

But the company will stop reporting Prime subscriber numbers starting next year.

The company said in announcing the decision In a message to shareholders: “In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential.”

She added that the number of subscribers today has become “just one element of our growth,” urging investors to focus on its profits and revenues.

Its first-quarter revenue rose nearly 15% year over year to $9.37 million.

The company also credited the “drum beat” of hit songs, such as the crime drama Griselda.

Some investors saw its unexpected decision to stop reporting subscriber numbers as a sign that Netflix's customer growth wave may be coming to an end.

Jamie Lumley of research firm Third Bridge wrote that the decision raises “questions about the growth prospects for Netflix's subscriber base.”

Netflix shares fell nearly 5% after the announcement.

“Streaming is a notoriously volatile market, and holding on to customer dollars is an uphill climb,” said Sophie Lund-Yates, senior equity analyst at stock trading platform Hargreaves Lansdowne.

“One area where Netflix excels is in its catalog of original content, which is known to be an excellent retention tool compared to repurposed shows and movies.”

Netflix last raised the price of its popular “Standard” plan in 2022.

The move was followed by an unusual drop in subscribers that stunned investors and intensified fears that Netflix was losing its dominance in the industry it had pioneered.

Soon after, the company said it would revive growth by cracking down on password sharing and launching a new plan that is less expensive but contains ads.

The company is also moving into areas such as sports and video games, while continuing to license material from rival media companies looking for ways to increase profits.

The company has also benefited from its global footprint, which has helped it maintain a relatively strong pipeline of new shows, despite the strikes that rocked Hollywood last year, analysts said.

Netflix shares have risen by more than 30% since the beginning of this year, approaching their peak in 2021.