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Netflix grows subscribers, misses on revenue

A crackdown on password sharing in Latin America caused Netflix to lose paid customer relationships there.

A crackdown on password sharing in Latin America caused Netflix to lose paid customer relationships there.

A smart television set running the Netflix application.
A smart television set running the Netflix application. (Stock image via Pixabay, Graphic by The Desk)

Netflix says its first quarter financial results for 2023 were right in line with what the company had forecast, with the entertainment company growing its revenue to $8.162 billion for the three-month period ending March 31.

The revenue was up from the $7.852 billion reported during its previous financial quarter and higher than the $7.867 billion reported for the first quarter of March 2022, according to the company’s financial earnings statement. It was slightly lower than the consensus estimate from Wall Street of $8.2 billion.

“In short, we’re off to a good start in 2023,” Netflix executives wrote in a letter to shareholders published Tuesday. “As always, our focus remains [on] pleasing our members and attracting great creators, so that we can continue to build a wildly-successful business.”

Netflix said its paid subscribers grew to 232.5 million around the world, a year-over-year increase of nearly 5 percent and up from the 230.75 million reported during the previous quarter.

The bulk of Netflix’s paid customer growth continues to be overseas, with the company adding 1.46 million new subscribers in the Asia-Pacific territories. In the United States, Netflix grew its subscriber base by 100,000 customers to end the quarter with 74.4 million paid accounts.

Netflix has been aggressively cracking down on password-sharing in Latin American countries over the last few months, and the earnings report reflected the impact on the company’s customer relationships there. The number of paid customers in Latin America fell to 41.25 million, reflecting a loss of 450,000 subscribers, marking the first time Netflix has lost customers in Latin America since the first quarter of 2022.

On Tuesday, Netflix executives warned that its password-sharing crackdown would soon come to the United States. In other countries, Netflix has offered customers the ability to pay slightly more if they want to share their account with streamers who live beyond their immediate household; it is widely believed the same offering will be made to customers stateside.

As was the case in Latin America, Netflix warned investors that the crackdown on password sharing would likely lead to a short-term loss of revenue, but said the plan was worth it over the long haul as it expects some freeloading streamers to convert to take up its lower-cost, ad-supported option or one of its premium streaming plans.

Netflix is also winding down its iconic DVD-by-mail rental business, which was the cornerstone of the company when it launched, officials confirmed on Tuesday. The company will mail its last DVD in late September.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).