Hollywood is in terrible misery, but Netflix had a reason to celebrate on Wednesday after executing its long-anticipated measures to crack down on password sharing and publishing a spectacular earnings report.
Investors were interested to see how much the company’s crackdown on password sharing would increase subscriber growth going into the earnings release.
Streaming Profits Concern Wall Street, But Netflix Stands Out
So now we are aware. And the statistics didn’t let us down.
Just one year after losing nearly a million customers, Netflix gained 5.9 million new ones in the ensuing quarter.
Expect Netflix, which currently has 238 million subscribers worldwide, to continue to gain from this crackdown on password sharing.
The streamer bragged that “sign ups are already exceeding cancellations” and that the password policy is currently being implemented globally.
With its stock down 8% in after-hours trading, Netflix (NFLX) did narrowly fail on revenue, as Wall Street is still concerned about the streaming profits that are affecting the sector as a whole.
However, it’s important to point out that Netflix (NFLX) is still in a league of its own because it has developed a successful streaming business model while its rivals in the traditional media industry struggle to accomplish the same in a more challenging climate.
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Netflix’s $5 Billion Cash Flow
In the midst of the turmoil engulfing Hollywood, Netflix, the first significant media business to disclose earnings this quarter, increased its free cash flow by $1.5 billion to almost $5 billion for the entire year.
The corporation blamed “lower cash content spend” in light of the writer’s and actor’s strikes that have completely halted content creation.
The elimination of the basic plan appears to be done in order to steer members in that price range toward the $6.99 ad-supported model.
The business has previously claimed that the $9.99 ad-free model outperformed the ad-supported strategy in terms of “economics”
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