Netflix kicked off the start of tech, media and telecom earnings season for the second quarter (Q2) of 2024 with a revenue report that beat Wall Street expectations.
On Thursday, Netflix said it earned $9.56 billion during the three-month period ending June 30, up 17% from Q2 2023. The figure was higher than the consensus estimate from Wall Street analysts, and slightly more than the $9.49 billion Netflix itself had projected for Q2.
Netflix is in the midst of overhauling its streaming product, which involves cracking down on password-sharing; pushing frugal subscribers toward its cheaper, ad-supported plan; and inking lucrative deals with third parties like the NFL and WWE to bring more appointment-viewing to its service.
“Viewing is key to Netflix’s success,” the company said in a letter to shareholders. “It’s the best proxy we have for member happiness, and when people watch more, they stick around longer (retention), talk about Netflix more often (which drives acquisition) and place a higher value on our service.”
To that end, executives affirmed they are testing a new user interface for its home screen, which includes more-personalized content recommendations that are visible through larger content tiles.
Executives also said Netflix is continuing on the path toward a robust advertising business, noting the ad-supported plans account for 45% of all new customer sign-ups while cautioning that it “takes time” to build a new sector “from scratch.” The company hasn’t disclosed how much revenue it generates from ads, which have been available through Netflix’s lowest-priced plan for nearly two years.
“The near-term challenge (and medium-term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory,” Netflix said, suggesting there is more demand than supply.
Deals with the NFL, WWE and other live event producers will give Netflix some additional space to sell and deliver those TV ads as that part of the business continues to scale.
