In a recent earnings release, Netflix revealed that its subscriber base increased by nearly 6 million, bringing the total number of subscribers to 238 million. This surge in subscriptions came as the US entertainment industry faced the threat of a writers and actors strike. However, Netflix seems well-prepared to weather the storm, with its co-chief executive, Ted Sarandos, actively negotiating with industry stakeholders to find a resolution.
Revenue, though lower than anticipated, reached $8.2 billion for the April to June period. This unexpected result caused Netflix’s shares to drop over 8 percent during after-hours trading on Wall Street. To counteract a rough period last year, Netflix has been actively cracking down on password sharing, and it seems to be paying off. Analysts have praised the company’s efforts, with one stating that the crackdown on passwords is effectively working.
In response to the crackdown, Netflix introduced “borrower” or “shared” accounts, allowing subscribers to add extra viewers for a higher price or transfer viewing profiles to new accounts. The company also launched an ad-subsidized offering, while eliminating its lowest-priced ad-free plan. Netflix believes that advertising will become a significant revenue stream, estimating $770 million in advertising revenue in the US this year and over $1 billion by 2024.
However, the threat of the ongoing writers and actors strike looms large over the entertainment industry. Productions have come to a standstill, with actors joining writers in an industry-wide walkout. Despite this, analysts believe Netflix is better positioned than its competitors to withstand the strike, thanks to its robust slate of upcoming releases from around the world.
