Netflix said that its number of subscribers hit a record high of 232.5 million in the first quarter of the year and that its nascent ad-supported tier was faring well. The streaming television giant reported a quarterly profit of $1.3-billion, in line with expectations, but said it had delayed a broad crackdown on sharing of account passwords “to improve the experience for members.
Netflix said it expects to begin rolling out its options for paid password sharing this quarter instead. It’s clear that the company wants to manage any fallout from the new strategy,” said Third Bridge analyst Jamie Lumley. That means some membership and revenue benefits resulting from the move were postponed, Netflix said in a letter to shareholders.
Netflix has dabbled with “borrower” or “shared” accounts in a few markets, but plans to roll them out in the United States and elsewhere this month, co-chief executive Greg Peters said in a streamed earnings interview.
Netflix said it is taking time to make sure subscribers have seamless access to the service away from home or on various devices such as tablets, TVs or smartphones. We learned from this last set of launches about some improvements we can do,” Peters said. It was better to take a little bit of extra time to incorporate those learnings and make this transition as smooth as possible for members.”
And while a new ad-subsidized subscription tier at Netflix is in its early days, engagement is above initial expectations and Netflix has seen “very little switching from our standard and premium plans.”
Market tracker Insider Intelligence forecast that Netflix will bring in $770-million in ad revenue from the new tier this year, and that revenue figure will top $1-billion next year. As growth at Netflix cooled last year, the Silicon Valley-based streaming company focused on creating a lower-priced subscription tier with advertising.
Netflix also set out to nudge people watching for free with shared passwords to begin paying for the service without alienating subscribers. This account-sharing initiative helps us have a larger base of potential paying members and grow Netflix long term,” said co-chief executive Ted Sarandos.
Source: eNCA
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