4 months ago • 2 mins
What’s going on here?
Netflix reported its quarterly results on Wednesday – and while they weren’t completely awful, the overall update was something of a tear-jerker.
What does this mean?
Netflix has been playing the bad cop recently, cracking down on account sharing in a bid to boost users – and that strategy seems to be working. After all, data showed a surge in new US subscribers after Netflix started warning about the clampdown. That helps explain why the firm added 5.9 million new subscribers last quarter – more than double what analysts predicted. But there’s a snag: revenue still fell short of expectations, partly due to price cuts in some markets and unfavorable foreign exchange rates. And while the firm unveiled plans to kick-start revenue growth, a worse-than-expected forecast didn’t exactly win investors’ hearts, and they initially sent shares down 6%.
Why should I care?
The bigger picture: Fruit of the union.
Hollywood’s currently on strike, forcing US studios to hit the pause button on productions as workers duke it out over pay. But don’t lose sleep over Netflix just yet: thanks to its global production capabilities, a hefty slice of its content comes from countries that aren’t caught up in the strike. That kind of flexibility served Netflix well during the pandemic – and it means the firm should keep the hits coming this time too.
Zooming out: The couch-potato economy.
Global economies are still wobbly, and consumers are feeling the pinch. But that could actually be good news for Netflix: see, the tighter the purse strings, the more likely people are to stay in – getting their kicks from Netflix rather than splurging on pricey nights out. Plus, with its rivals tightening their belts in these tough times, Netflix could find itself with less competition too. Throw in the firm’s new, cheaper, ad-supported offering, and Netflix could still be set for a healthy year, if it plays its cards right.
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