Netflix Surges with Record First Quarter Subscribers Despite Slowing Growth

Netflix has had the best first quarter since 2020. After slower growth in 2021 and 2022, the American streaming service was able to attract 9.33 million new subscribers in the first three months of the year, ‘ announced the company on Thursday night. That’s almost twice what analysts (on average) had expected beforehand. The growth was evident worldwide, but Netflix was especially able to register a significant growth in new subscriptions in the US and Canada. The streaming service’s turnover and profitability were also higher than expected. Turnover rose 15 percent to $9.37 billion, net profit 79 percent to $2.33 billion.

Netflix itself sees two important reasons for the acceleration of growth: its own range of productions (series such as Ripley, Fool me once, Griselda in 3 physical problems are important crowd pullers) and the actions taken by the company against password sharing (where several families use the same account). Before that, more than 100 million people used an account they didn’t pay for, according to the company two years ago.

Although there were initially fears that many subscribers would cancel their accounts due to the measures, Netflix was still able to convince millions of viewers to take out their own subscriptions. In the US, Netflix now has an 8 percent market share among television viewers, Bloomberg notes. Netflix has about half a billion viewers worldwide, according to the company. “No entertainment company has ever offered programming on this scale and with this ambition,” Netflix wrote in an open letter to shareholders.

Slowing growth

Despite the growth, Netflix shares were hit on the American stock market. After already rising about a quarter this year, it fell 4.6 percent on Thursday night (local time in New York). Investors had already expressed optimism before the results were announced, and when the results were announced, the company immediately warned that growth will be lower this quarter.

For Netflix investors, subscriber growth has always been an important metric to analyze the company’s performance. But that figure is becoming less and less representative, say management, as there is now more variation in the subscription formulas offered – for example, Netflix is ​​now offers a cheaper subscription with advertising. Starting next year, Netflix will stop reporting new subscribers every quarter. The management of the American streaming giant wants to focus more on more traditional business metrics, such as profitability and turnover. Only the “significant milestones” in subscriber growth will be highlighted.