Netflix, reporting its earnings for the first time without former co-CEO Reed Hastings, started the year by adding 1.75 million subscribers, bringing up the total number of global subscribers to 232.5 million.
The subscriber growth represented a 4.9 percent year-over-year increase compared to the disastrous first quarter of 2022, when the streamer lost subscribers and set off a domino effect of sorts for other media companies that had, up until that point, gone all-in on streaming.
Compared to each quarter, the 232.5 million total subscribers number for Q1 is a modest increase compared to Q4. The streaming giant closed out 2022 with a total of 230.75 million global subscribers, representing an addition of 7.66 million subscribers during the fourth quarter after a year that saw the company lose upwards of 970,000 subscribers at one point and face a major stock price plummet as a result.
But thanks in part to a better-than-expected fourth quarter and continued subscriber adds for the first quarter, Netflix’s 2023 appears to be its recovery year. The company brought in $8.16 billion in revenue during Q1 and is expecting to reach $8.24 billion for the current quarter.
Netflix saw modest growth in the U.S./Canada region, adding 100,000 subscribers during the quarter — though some of which appear to have been at the cheaper ad-supported level, given that the average revenue per membership dropped from $16.23 in Q4 to $16.18 in Q1. The Latin America region underperformed for Netflix as it lost 450,000 subscribers during the first quarter.
As Netflix turns its focus to revenue numbers for its quarterly earnings (the streamer is no longer providing guidance for subscriber numbers), the company is forging ahead with its account sharing crackdown, which rolled out in markets like Canada, New Zealand, Portugal and Spain earlier this year. The U.S. will have its turn beginning in the second quarter, Netflix said in its Tuesday letter to shareholders.
The company is also continuing to focus on its advertising business and will host its first Upfronts presentation on May 17 at the Paris Theater in New York. In the shareholder letter, Netflix noted the “healthy performance and trajectory” of its per-member advertising economics in the U.S. and said the streamer will continue “upgrading [Netflix’s] ads experience with more streams and improved video quality to attract a broader range of consumers.” For advertisers, that also includes the launch of a “programmatic private marketplace to enable more buying options for Netflix ad inventory using Microsoft’s sales platform,” the letter said.
And as the ad-supported tier begins a new era for Netflix, the streaming giant is also closing the chapter on another as it pulls back on spending. Ahead of announcing its first-quarter earnings, Netflix said it was bidding adieu to its long-standing DVD business on Sept. 29 after 25 years of sending out those iconic red envelopes.
In a blog post, Netflix co-CEO Ted Sarandos said the DVD mail service has continued to shrink, making it “increasingly difficult” to continue with the business. “We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees achieved and excited to continue pleasing entertainment fans for many more decades to come,” Sarandos wrote. “To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you.”
More to come.
