Netflix’s revenue expectations remained on track for the first quarter, despite adding only 1.75 million global paid subscribers. The streamer on Tuesday also announced it would push back its broad launch of paid sharing to Q2.
In its letter to shareholders, Netflix said revenue and operating profit were in-line with the company’s forecast. Q1 revenue reached $8.16 billion, up 3.7% from $7.87 billion in the first quarter of 2022, when the streamer had reported its first subscriber loss in over a decade. Operating income for Q4 was $1.7 billion and net income was $1.3 billion.
Domestically, Netflix brought in 102,000 net subscriber additions in the U.S. and Canada. But the highest number of paid net adds for the quarter came from the Asia-Pacific (APAC) region, which reeled in 1.46 million additional paid users, while Europe, Middle East and Africa (EMEA) added 644,00 subscribers. Latin America, on the other hand, lost 450,000 paid users in Q1.
All told, Netflix ended the quarter with around 233 million global paid subscribers, with average paid memberships increasing 4% year-over-year.
More broad paid sharing in Q2
Netflix told shareholders it’s “pleased with the results” of its paid sharing rollouts in Canada, New Zealand, Spain and Portugal.
“In Canada, which we believe is a reliable predictor for the U.S., our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the U.S.,” said Netflix.
The streamer initially targeted a more widespread paid sharing launch in Q1, which would have affected the U.S. But Netflix is opting to delay that rollout until the second quarter, as it found “enough improvement opportunities” for the mechanism.
As for Netflix’s ad-supported tier, which launched last November, the company reported it’s seeing “healthy performance and trajectory of [its] per-member advertising economics, particularly in the U.S.” Bloomberg in March reported monthly active users on Netflix with ads reached 1 million.
Due to the ad-supported tier’s initial performance, Netflix said it’s upgrading its ads experience with more streams and improved video quality, “to attract a broader range of consumers.”
Farewell to DVDs
After over two decades, Netflix has decided to retire its DVD rental business, as that segment “continues to shrink.” The company will ship its final DVDs on September 29, 2023, noting the DVDs “paved the way” for streaming.
“In short, we’re off to a good start in 2023. As always, our focus remains pleasing our members and attracting great creators so that we can continue to build a wildly successful business,” Netflix concluded to shareholders.
More details on Netflix’s plans for paid sharing and advertising will likely be revealed on the company’s upcoming earnings call, scheduled for Tuesday evening.