10 months ago • 2 mins
What’s Going On Here?
Netflix couldn’t pull off a livestream of Love Is Blind, so it’s probably no surprise that its results underwhelmed late on Tuesday too.
What Does This Mean?
After an outright drop this time last year, Netflix’s subscriber growth mishit for the second year in a row on Tuesday, adding 1.75 million users last quarter – short of analysts’ 2 million target – and nudging the total subscriber count to 233 million. And sure, with its newfound focus on profitable growth, it’s a good thing Netflix did beat profit expectations, but its less-than-stellar revenue and profit forecast for this quarter still left investors uneasy. Plus, Netflix hit pause on plans for a broad rollout of its password-sharing crackdown – in a bid to improve its current offering – delaying the anticipated revenue bump more accounts would bring. The result: an initial plunge in shares for the streaming giant.
Why Should I Care?
Zooming in: Sharing isn’t caring.
Netflix shares eventually found their footing after that nosedive, which makes a lot of sense. Granted, putting the brakes on the password sharing crackdown isn't ideal – but in reality it just postpones the good days. See, with 100 million folks piggybacking on shared accounts, it’ll only take a fraction of them going solo to make subscriber counts and revenue bloom. Combine that with the slow-but-steady launch of ad-supported options, and Netflix's growth train isn't likely to stop anytime soon.
The bigger picture: Love is blind, and viewers cannot see.
Netflix is no longer the only big fish in the streaming pond, with the likes of Disney and Amazon making sizable splashes of their own these days. In fact, consulting firm Parks Associates thinks that Prime Video actually managed to snatch Netflix’s crown as the top subscription service last year. That means Netflix will need to keep cranking out hits – while steering clear of live programming blunders (ahem, Love Is Blind) – to keep subscribers from jumping ship.
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