Netflix has reported a strong second quarter, adding 5.9million new paid subscribers. This surge has exceeded Wall Street expectations, further securing the company’s position as a leading force in subscription streaming video.
The streaming giant, under the leadership of co-CEOs Ted Sarandos and Greg Peters, recorded $8.2billion in revenue and a net income of $1.5billion. This growth increases Netflix’s global paid memberships to a staggering 238.4million.
Prior to the announcement, Netflix had guided investors towards an expectation of $8.2 billion in revenue for their first quarter and an operating income of $1.6 billion. The company achieved the predicted revenue and surpassed the income estimation, recording $1.8 billion in operating income in Q2.
The robust Q2 results mark the first earnings report since Netflix began its password-sharing crackdown in the US. The company refers to this initiative as ‘paid sharing’, urging those who share passwords to either pay for an additional subscription or buy their own.
“The cancel reaction was low,” the company stated, adding that the success of the paid sharing strategy has been such that it plans to roll it out to “almost all” remaining countries. Netflix’s flourishing comes as it continues to promote its advertising-supported plan.
On Wednesday, the company discontinued its cheapest ad-free plan (labelled as the ‘Basic’ plan), directing new or returning subscribers towards either its $6.99 ad-supported or $15.49 standard ad-free plan. This move signals the company’s intention to push more new subscribers towards the ad plan, which executives say generates more revenue per subscriber than the standard plan.
The growth and profit margins enjoyed by Netflix have left its competitors trailing. Rivals such as Disney,+ Paramount Plus, NBCUniversal, and Warner Bros. Discovery continue to grapple with financial losses as they strive to make their streaming services profitable, each setting a target of 2024 to turn a profit.
