Netflix added 5.9 million new subscribers in the last three months – almost three times as many as analysts expected – after clamping down on households that were sharing their passwords.
The streaming giant is the first of the big tech and media companies to unveil their latest quarterly results. The figures come as strikes from writers and actors have hit the industry – the first time both unions have walked out since the 1960s.
“This strike is not the outcome that we wanted,” co-chief executive Ted Sarandos said. He said the company hoped to reach an agreement “as soon as possible.”
Announcing its latest quarterly finances, Netflix said it had made a profit of $1.8bn over the quarter on revenues of $8.3bn. Analysts had expected Netflix to add around 2m new households over the last three months as people who had shared the service for free opted to pay for their own accounts. Netflix now has 238m subscribers globally.
The strike over pay and the use of artificial intelligence (AI) is expected to profoundly affect the industry over the coming months, pausing new seasons of global hits including streaming shows House of the Dragon and The Last of Us and movies including Gladiator 2 and Mission: Impossible – Dead Reckoning Part Two.
Some analysts have argued that Netflix is better positioned than its traditional media peers to weather the strike. Last year the company lost subscribers for the first time in its history. It has since begun to pick up subscribers again and at the start of the year announced a crackdown on password sharing.
According to the company, more than 100m households have been participating in password sharing.
This week Deutsche Bank analysts predicted that an increase in “paid sharing” would boost Netflix’s revenues through 2023 and that the company would also benefit from its backlog of programming, its international audience and its ability to generate hits from overseas – such as Squid Game and Money Heist. “Virtually all of the headwinds plaguing the traditional TV focused media companies are tailwinds for Netflix,” Deutsche Bank wrote in a note to investors.
Netflix has also moved to broaden its income stream, introducing an ad-supported subscription after last year.
On Tuesday the company announced it was dropping its cheapest commercial-free monthly plan in the US and the UK, in a push to get more sign-ups for its ad-supported option.
The plan had cost $9.99 in the US and £6.99 in the UK and restricted subscribers to streaming HD content on only one device at a time. Netflix’s cheapest tier is now its $6.99 (£4.99) per month ad-supported tier.
