2023 Quarter 3
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Netflix announced in May 2023 that it will no longer turn a blind eye to password sharing among members of multiple households. According to Netflix "A Netflix account is meant to be shared by people who live together in one household."
Now Netflix is using a combination of IP addresses, device ID's, and "account activity from devices signed into the same account" to stop password sharing.
Based on Netflix's Q2 subscriber results, the new policy increased total subscribers. Users, who were previously using other household's account, are now subscribing to Netflix. It is expected that this trend will continue in the near future, resulting in an increase in Subscribers in Q3 financial result.
According to the chart, based on a survey, provided below, 25% of current password sharers are willing subscribe to Netflix. For 30M password-sharing users this mean 7.5M new subscribers!
Source of the Chart below: https://www.lightreading.com/video-streaming/study-netflix-s-password-sharing-crackdown-poised-to-add-subs-and-revenues
@dorinmosalman41ab thanks — also worth noting that since the policy rollout began in May, there was at most a half-quarter of impact in Q2 results, so one might expect bigger uplift in Q3 (all else equal, and to the extent this was the major driver of additions in Q2)
I think they will not report a decrease in subscriber. As stated in Netflix’s letter to shareholders, the paid sharing subscription has been launched in May and is already representing more than 80% of their revenue base. Revenue is higher than pre-launch and sign-ups are exceeding cancellation. In Q2 revenue were in-line slightly under the forecast, however, revenue growth is expected to accelerate in second half of ’23 due to benefits from paid sharing and ad-supported plan. In addition, even though whether or not the business will keep its long-term competitive advantage, there is a positive sentiment across the market about short-term growth (+4% revenue growth in Q3).
@GiovanniGhedini I agree with the analysis that Netflix's Q3 performance is poised for growth, with new subscription models bolstering revenue—a sentiment echoed by a 4% projected revenue increase. The shareholder letter's data, showing more sign-ups than cancellations, supports this optimism. However, true statistical thinking necessitates examining factors like market saturation and consumer behavior. Employing time series analysis and regression models would provide deeper insights into the effects of Netflix's strategic initiatives on its subscriber base. Additionally, analyzing churn rates post-new model launch would offer a clearer view of its success. For Q4, Netflix's revenue is expected to hit $8.7 billion, with a slight decrease in net income to $956 million. Subscriber growth is anticipated to be in line with Q3's 9 million, give or take a few million (Weprin, 2023). This forecast aligns with a statistically informed perspective, considering potential fluctuations and market dynamics.
Reference: Weprin, A. (2023, October 18). Netflix Adds 9M Subscribers Amid “Challenging” Six Months Due to Strikes. The Hollywood Reporter. https://www.hollywoodreporter.com/business/digital/netflix-q3-2023-earnings-1235621082/
@MaureenLepatan This is getting so extremely chaotic. This market already resolved. Whose AI bot is on the loose? Get it back in the cage because it is out of control.
such a weird market. what does @Puggy know? why all the chatgpt comments? will it have to resolve NA?
@mvdm I don’t have any insider information. I think the subscriber base is going to fall because of streaming competition, climbing consumer debt, and the Netflix subscription being the first thing people cut when tightening their budget.
In general my strategy on here is to do 2-3 massive trades on bets I’m relatively confident in at a good price.
Looking ahead, Netflix's guidance for the current quarter indicated an even steeper decline in new users, with an expected loss of 2 million subscribers. This projection contrasted with consensus analysts who had predicted a gain of 2.4 million. Netflix attributed these challenges to high household penetration, account sharing, and increased competition, which collectively presented headwinds to revenue growth. Looking at the key metrics from Netflix's first-quarter report, compared to consensus estimates compiled by Bloomberg:- Revenue: Netflix reported revenue of $7.87 billion, slightly below the expected $7.95 billion, but showing growth from the previous year's $7.16 billion. - Earnings per share (EPS): The company reported an EPS of $3.53, surpassing the expected $2.91 and slightly lower than the $3.75 from the previous year.- Net subscribers: Netflix reported a surprising decline of 200,000 net subscribers, while analysts had expected an increase of 2.51 million. This was a significant departure from the 3.98 million net subscriber additions in the previous year.
https://finance.yahoo.com/news/netflix-earnings-preview-q1-2022-subscribers-145328663.html
It is possible because Netflix lost 1.3 million customers in the US in the second quarter of 2023, the company's first quarterly subscriber decline in over a decade. Netflix's US subscriber base fell by 2% as a result. Analysts are divided on whether Netflix will announce a drop in US subscribers. Some analysts anticipate Netflix will continue to lose members, while others believe the company will be able to stabilize its subscriber base and even begin to add new subscribers. Besides this, according to a recent survey conducted by the research company MoffettNathanson, 11% of Netflix members in the United States want to terminate their subscriptions over the next three months. This is an increase from the previous quarter's 8%.
I would say no, it seems that Netflix is doing just fine even though they've implemented increase/decrease of subscription cost in the past. Last year Netflix had had 2.4 millions of increase in subscribers. This year would probably be the same of even higher in terms of subscription increase.
Netflix Adds 2.4 Million Subscribers, Reversing a Decline - The New York Times (nytimes.com)
@Predictor Netflix's regional reporting consolidates US and Canada, as seen in financial statements here; can you clarify whether you'll resolve on the basis of these consolidated figures?
@Predictor I don't think you understood my question. Netflix does not report standalone figures for US subscribers, it reports US & Canada jointly (see screenshot of official financials from Q2). Please can you clarify whether you'll resolve on the basis of the US & Canada figures?
@mvdm fwiw i think it would be reasonable to resolve on the basis of US&Canada numbers, but that if so, you should clarify this in the question description.