Netflix gained 9.3 million subscribers this year as it adjusts its streaming strategy

Netflix gained 9.3 million subscribers this year as it adjusts its streaming strategy

Last year, Netflix made a very risky bet by pushing users who shared passwords to create their own accounts – but it paid off.

Netflix, the dominant player in streaming, added more than 9 million subscribers in the first three months of the year, reaching a record high of 269.6 million subscribers.

“It added more customers than many analysts, including myself, expected,” said eMarketer senior analyst Ross Benes. “This indicates that password sharing is more common than previously thought as Netflix continues to convert freeloader viewers to paying users.”

Although subscriber additions beat Wall Street estimates, the company still reported a drop in growth from its explosive fourth-quarter report, when Netflix added 13 million subscribers. Netflix announced Thursday that it plans to stop sharing its quarterly subscriber numbers in 2025.

The company also reported revenue of $9.37 billion and earnings per share of $5.28 for the first quarter, beating Wall Street estimates, according to FactSet.

However, the stock, which has been a Wall Street favorite this year, fell in after-hours trading.

Much of the company’s past growth and success, analysts say, came from its long-established business model. In recent months, Netflix has made moves to expand and even radically reinvent its business in an effort to turn a profit.

While streaming rivals such as Disney+, Hulu, Max (owned by CNN parent Warner Bros. Discovery) and Peacock seek to attract subscribers with original programming, Netflix has made big bets lately in live sports, video games and in deals to license others. provider content — all while transitioning from an ad-free subscription service to a fully ad-supported juggernaut.

The reinvention of Netflix
For Netflix, last month’s Oscars were a disappointment: Although the streaming service topped its competitors in nominations, it took home just one award, for best live-action short film. Going forward, the company seems to be moving away from what it’s known for: spending its money on developing big-budget movies and TV shows capable of winning the awards.

The company’s first-quarter letter to shareholders laid out several goals to “sustain long-term healthy growth,” including: “Increase the diversity and quality of our entertainment — with more great TV shows and movies, stronger games and must-see programming directly.”

In recent months, after “Suits” exploded in popularity on the platform, Netflix has stated that it plans to license more content from other studios. A new generation is rediscovering iconic shows from the 90s and earlier, such as “Seinfeld” and “Sex and the City” after they appeared on the Netflix platform.

“They get a lot of views on original content and licensed content,” said Alicia Reese, an equity analyst who covers Netflix for Wedbush Securities. “It’s productive and it’s cheaper for them.”

Netflix has also expanded into live programming and sports this year, encroaching on traditional TV domains. In February, Netflix aired its first awards show, the Screen Actors Guild Awards, and announced a 10-year deal to broadcast “WWE Raw” live, worth more than $5 billion.

In its fight for eyeballs, Netflix has gotten creative, partnering with Rockstar Games’ “Grand Theft Auto,” the wildly popular action-adventure video game franchise, to further enter the video game space.

“We’re thrilled with GTA’s performance,” Netflix co-CEO Greg Peters said in January. “We’ve been in the top mobile game downloads for several weeks, which shows it’s not only huge for us, but a huge number for mobile gaming in general.”

Reese has faith in Netflix’s new direction.

“Netflix has that winning formula now,” he said. “They have a lot of different types of content that keep people using the service at a variety of price points.”

TV with commercials, again
Reese said he believes Netflix also has other growth channels including the company’s newer advertising-supported subscription tier.

The ad tier, which costs $6.99 a month in the United States, far less than other Netflix subscription plans, has seen rapid growth since it was introduced in late 2022, menurut the company. In January, Netflix’s advertising president, Amy Reinhard, shared that Netflix’s ad tier has more than 23 million users.

Although the company did not share updated ad-level user numbers, in a shareholder letter Thursday, Netflix said its ad membership grew 65% quarter over quarter.

Reese said Netflix’s future growth could depend on its success in the advertising space.

In January, Peters said the company aimed to wrest more ad dollars from traditional TV competitors.

“We know ad dollars follow engagement. We have the most engaged audience so we believe we are well positioned to capture some of the ad spend moving from linear to streaming,” he said.

Netflix will stop sharing quarterly subscribers
On the company’s earnings call, Netflix co-CEO Greg Peters discussed the company’s decision to stop sharing quarterly paying subscriber numbers starting in 2025.

“We have grown and we will continue to grow, developing our revenue model and adding things like advertising and our additional member features. Things that are not directly related to the number of members,” he said. “So, each additional member has a different business impact.”

Benes of Marketer, said Netflix’s decision to stop sharing subscriber numbers allows the company to “stop ahead and emerge as the heavyweight champion of the world in subscribers”

“Netflix is emphasizing things that benefit them,” Benes said. “The increase in password sharing will eventually slow down and it will be very difficult to continue to add as many customers as they have added in the last few quarters.”