Netflix also fights password-sharing
Netflix last month said it will fight password-sharing by charging an extra fee of about $3 to users who share accounts with people in other households, with the fee rolling out first in Chile, Costa Rica, and Peru.
“[I]n addition to our 222 million paying households, we estimate that Netflix is being shared with over 100 million additional households, including over 30 million in the UCAN region [US and Canada],” Netflix said in its letter to shareholders Tuesday. The letter said that Netflix is planning “more effective monetization of multi-household sharing.”
Netflix said that “account sharing as a percentage of our paying membership hasn’t changed much over the years,” but it’s becoming a bigger focus for the company as it struggles to grow its subscriber base. Hastings discussed plans to tackle account sharing without offering much detail:
We’re working on how to monetize sharing. We’ve been thinking about that for a couple of years, but when we were growing fast, it wasn’t a high priority to work on, and now we’re working super hard on it. Remember, these are over 100 million households that already are choosing to view Netflix. They love the service; we’ve just got to get paid at some degree for them.
Ads not a short-term fix
Hastings also said that ad-supported streaming is “not a short-term fix” for revenue and that it would take a couple of years for ad-supported subscriptions to reach a “material volume” in terms of earnings.
Netflix would rely on third-party advertising services, Hastings said.
“In terms of the profit potential, definitely the online ad market has advanced, and now you don’t have to incorporate all the information about people that you used to, so we can be a straight publisher and have other people do all of the fancy ad matching and integrate all the data about people,” he said. That means Netflix “can stay out of that and really be focused on our members, creating that great experience and then getting monetized in a first-class way by a range of different companies who offer that service.”
Revenue slows, users decline
Netflix’s Q1 revenue was $7.87 billion, up 9.8 percent year over year. Netflix had grown revenue by 16 to 24 percent each quarter during 2021. Netflix projects year-over-year revenue growth of 9.7 percent in Q2 2022.
Net income in Q1 2022 was $1.6 billion, down from $1.71 billion in Q1 2021.