Netflix has nearly 270 million subscribers worldwide, after raking in more than 9 million additional subscriptions in the first quarter — far more than expected — but the streaming pioneer no longer wants to depend solely on this growth to stay at the top.
“We will obviously continue to increase the number of subscribers, but the overall growth of the company now has additional drivers, such as the optimization of subscription formulas, […]advertising revenue and adjusting prices based on added value,” Greg Peters, co-chief executive officer, said on Thursday.
“These levers constitute an increasingly important part of our economic model,” he added during a conference call after the publication of quarterly results.
The group, which forecasts lower subscriber gains for the current quarter, has also announced that from next year, it will no longer disclose the number of new subscriptions every three months.
Greg Peters explained that he wanted to focus on audience “engagement” measures (time spent watching content), because they “better” reflect the platform’s ability to retain and attract, and therefore generate “engagement, revenue and profit — our North Stars”.
In the first quarter, on the strength of its spectacular growth, Netflix achieved 9.37 billion US dollars in turnover and 2.3 billion in net profit, two results up year-on-year and also higher than forecasts.
” Convert “
The platform had already started 2024 with great fanfare with 13 million additional subscribers gained during the holiday season, thanks in particular to its stricter policy on sharing accounts between users and its cheaper subscription with advertising.
“Netflix continues to screw over its competitors,” reacted Ross Benes of Emarketer. “This indicates that password sharing was even more common than previously thought, as the service continued to turn parasitic viewers into paying users.”
And it’s not over. Netflix is working on “ever more effective mechanisms to convert people”, assured Greg Peters, whether they are users who “borrow codes”, old subscribers or newcomers.
In this context of abundance, some analysts wonder why Netflix has planned to spend “only” $17 billion on content in 2024, instead of acquiring more broadcast rights to series produced by third parties, for example. example.
The service “risks losing its spirit of innovation” if it becomes more selective in the production of content to save money, believes Ross Benes.
This year Netflix will be able to count on new seasons of successful house series, such as Bridgerton and especially the phenomenal South Korean series Squid Game.
In March it also launched The 3-body problemnew science fiction series from the creators of Game Of Thrones and adapted from a great bookstore success in China.
Boxing match
But Netflix must no longer only fight to attract and retain the attention of viewers, it must also convince advertisers, notes Mike Proulx, vice-president of Forrester.
Most streaming platforms now offer a subscription plan with advertising, so “brands have more options,” emphasizes the research director.
In January, the company signed a ten-year broadcast deal with the American professional wrestling league WWE, for $5 billion, and in March, it announced the live broadcast at the end of July of a boxing match between YouTuber and apprentice boxer Jake Paul and ring legend Mike Tyson.
“Events like this attract advertisers because they generate a lot of attention and allow brands to partner with more personalized advertising formats,” explains Mike Proulx.
The formula is already attracting users: more than 40% of new subscribers choose it in countries where it exists, according to Netflix.
On Wall Street, the group’s stock lost more than 4% during electronic trading after the stock market closed on Thursday.
The market “did not appreciate” the decision to no longer publish the number of subscribers, analyzes Sophie Lund-Yates, of Hargreaves Lansdown.
But according to her, it is a “natural evolution”: “The objective has always been to grow the customer base, then to diversify the sources of income”.