Netflix announced on Thursday that it added over 8 million subscribers in the second quarter, boosted by popular titles such as Bridgerton, Baby Reindeer, and The Roast of Tom Brady, as well as a crackdown on password-sharing. However, despite surpassing analyst expectations, Netflix also alerted that the growth in subscribers during the third quarter would be less than the second quarter of 2023, when the anti-password-sharing campaign had just commenced.
Following the announcement, Netflix saw a 4 per cent drop in its shares in after-hours trading, closing at $617.32 (€566.65). Yet, by the end of June, the streaming giant’s total number of worldwide subscribers has exceeded 277 million, thanks to the new sign-ups.
In terms of the financial details of the operation, earnings per share came out to $4.88, slightly higher than the LSEG’s consensus forecast of $4.74 a share. Meanwhile, the quarterly revenue clocked in at $9.56 billion, aligning with predictions.
Furthermore, the company’s ad-supported tier’s growth has been scrutinised by Wall Street investors. Factors that have propelled this growth include the crackdown on password-sharing, hike in prices for ad-free tiers, and new consumer bundles like Comcast’s ‘StreamSaver’ bundle that incorporates Netflix with Peacock and Apple TV+.
While Netflix disclosed a 34 per cent rise in the ad tier memberships from the last quarter, it did not share the exact number of subscribers who chose that option. However, Netflix mentioned in its investor report that: “The growth is good, becoming a significant part of our business. However, setting up a business from scratch requires time. Furthermore, given the size of our subscription revenue, we don’t foresee advertisements being a key contributor to our revenue growth in 2024 or 2025.”
Netflix is furthermore anticipating a revenue growth of 14 per cent in the upcoming third quarter as compared to last year.
Netflix mentioned that three years into its video game initiative, a multiplayer game based on the popular dystopian Korean show, Squid Game, is set for release later this year along with season two. Also in the pipeline are games based on Emily in Paris and Selling Sunset.