“Netflix’s Crackdown on Password-Sharing Boosts Profits by 54%, Welcoming 9.3 Million New Subscribers in Q1”

Netflix’s Strategic Move Against Password-Sharing Proves Lucrative: Profits Surge 54% with 9.3 Million New Subscribers

Netflix’s recent crackdown on password-sharing, initially feared to impact revenue negatively, has proven to be a wise decision. The streaming giant’s financial performance in the first quarter has exceeded expectations, with operating income skyrocketing by an impressive 54%.

This surge in profits is accompanied by a remarkable addition of 9.3 million new subscribers worldwide, indicating that the long-term effects of the password-sharing measures have surpassed initial concerns.

Earnings per share for Netflix reached $5.28, surpassing Wall Street’s predictions of $4.51. The company’s operating income surged to $2.6 billion, a significant increase from the $1.7 billion reported nearly a year ago.

Netflix’s total subscriber count now stands at 269 million, reflecting a remarkable 16% increase from the previous year.

In a significant decision, Netflix announced its intention to stop disclosing subscriber numbers starting from next year, a metric traditionally vital for investors in the streaming industry. Instead, the company plans to focus on engagement metrics, such as subscriber time spent on the platform, and explore new revenue streams like advertising.

However, this decision to halt quarterly subscriber number reporting starting in 2025 has caused a reaction from investors, leading to over a 4.5% drop in share prices during after-hours trading.

Despite the drop, Netflix shares have seen a 30% increase this year, outperforming the broader market. The company is banking on sustained engagement to drive future growth, with certain shows like “Fool Me Once,” “Griselda,” and “3 Body Problem” contributing to success in the first quarter.

Looking ahead, Netflix expects revenue growth between 13 to 15% for the entire year. In its shareholder letter, the company emphasizes engagement as the primary indicator of customer satisfaction and plans to announce significant subscriber milestones as they occur.

By shifting focus to time-spent-viewing metrics, Netflix aims to redirect investor attention toward metrics with greater long-term growth potential.