Netflix posts anticlimactic results, but hopes its mooching crackdown will fuel growth
RIP red-envelope DVDs… this one’s for you. Netflix shares dipped yesterday, and not because the streamer announced it’s ending DVD rentals (was still a thing). It added only 1.7M new subscribers last quarter — fewer than half what Wall Street was expecting. Netflix said subscriber growth would be similar this quarter, but hopes for brighter days ahead.
Play next… ad. After rolling out in November, Netflix's $7/month US ad-tier now earns more revenue per subscriber than its standard plan, which costs twice as much.
Three months left… to use your ex’s password. Netflix delayed its global “paid sharing” plan (ahem, password-mooching crackdown) in the US and other major markets until June. It doesn’t expect the extra $$ to kick in till the third quarter.
Are you still watching… on Mom’s account? 100M people use someone else's Netflix without paying. In February, the streaming icon launched its paid-sharing plan in countries including Canada, Spain, and New Zealand. Cue: searches for “cancel Netflix account” soared 8X. FYI: nearly two-thirds of zillennials have canceled a streaming sub in the past six months.
- But Netflix said the initial “cancel reaction” was followed by a boost in subscriptions and revenue. Canadian subs have grown since the crackdown, despite it costing $8/month to add new users to accounts — and revenue there is growing faster than in the US.
Good content captures eyeballs… but must-see content captures wallets. No one wants to pay yet another monthly subscription fee. But Netflix hopes that its multibillion-dollar content budget (and loyal watchers of series like “You” and “Outer Banks”) will shell out to stay. While the “cancel reaction” could lose casual watchers, it may add lifelong subscribers.