In commentary released alongside its 2023 Q1 results, global streaming giant Netflix has highlighted its performance in a number of key areas.
“We’re off to a good start in 2023,” noted the company in a presentation that wasn’t fronted by Reed Hastings for the first time since he co-founded the business.
Ted Sarandos
Instead, stepping up to the plater were co-CEOs Greg Peters and Ted Sarandos.
As Netflix reported a growing audience and lower profit, the company highlighted its remains the industry leader in engagement, revenue and profit.
Membership grew to 232m globally.
Total revenue pushed above $8b and was up 3.7% YOY. Net income YOY was down from $1.597b to $1.283b.
Netflix: Advertising results
Regarding the recently introduced advertising tier, the company reported: “Given current healthy performance and trajectory of our per-member advertising economics, particularly in the US, we’re upgrading our ads experience with more streams and improved video quality to attract a broader range of consumers.
“While it’s still very early days, we continue to be pleased with our progress across all key dimensions: member experience, value to advertisers and incremental contribution to our business. Engagement on our ads tier is above our initial expectations and, as expected, we’ve seen very little switching from our standard and premium plans.
“On the advertiser side, we are launching a programmatic private marketplace to enable more buying options for Netflix ad inventory using Microsoft’s sales platform. Our partnerships with Integral Ad Science and Double Verify are also now live – validating campaign engagement of ads viewership on Netflix.”
Murder Mystery 2
Netflix results: Content highlights
The company reported on “successful returning seasons” of Outer Banks, You, Ginny & Georgia and the sequel film Murder Mystery 2.
It claimed new hits across nearly every genre of TV for The Night Agent (now its sixth most popular English language TV show ever), The Glory (fifth most popular non-English TV show ever), Full Swing, That 90s Show and films You People and Luther: The Fallen Sun.
APAC growth
Given that Netflix never reveals breakout results for Australia, this is what we can glean from its commentary about the region: “APAC revenue grew 2% year over year (+10% F/X neutral). Average paid memberships increased 17% year over year. This offset a 13% decrease in ARM (-6% F/X neutral), which was due to plan mix and a higher mix of member growth in countries with lower pricing.”
Membership growth in the APAC region was significant across the past 12 months. It’s just shy of 40m now, up from 33.7m 12 months ago.
Netflix forecast
Looking forward, the company reported: “Our primary financial metrics are revenue for growth and operating margin for profitability. Our long-term financial objectives are unchanged – sustain double-digit revenue growth, expand operating margin and deliver growing positive free cash flow. The quarterly guidance we provide is our actual internal forecast at the time we report. We strive for accuracy although the rollout of major new initiatives (paid sharing and ads) leads to less-than-normal visibility.
“We’re on track to meet our full-year 2023 financial objectives. For Q2’23, we forecast revenue of $8.2b, up 3% year over year, or 6% growth on an F/X neutral basis. We’re pleased with the most recent launches of paid sharing, and while we could have launched broadly in Q1, we found opportunities to improve the experience for members.”
Streaming competition
This commentary about the fierce streaming wars: “Competition remains intense as we compete with so many forms of entertainment (linear TV, gaming, user generated content, premium streaming content, and social media to name just a few). Among our streaming video competitors, our traditional entertainment peers appear to be focused on revenue diversification (across theatrical, linear TV and third party licensing) as they manage through the hard transition from legacy businesses to streaming – whereas we are “all in” on streaming and already generating significant profit and free cash flow.
“The large tech companies continue to invest heavily in streaming, with a particular focus on live sports recently. We don’t focus too much on the competition because we’ve learned over the years that consistently great execution (better movies, TV series, and now games, better discovery and buzzier, more creative marketing) is the key to our long-term success. We succeed by getting a bit better, a bit faster than the competition every month.”
Netflix closing US DVD operation
After 25 years, Netflix has decided to wind down DVD.com later this year. “Our goal has always been to provide the best service for our members but as the DVD business continues to shrink that’s going to become increasingly hard. So we want to go out on a high, and will be shipping our final DVDs on September 29, 2023.
“From the very beginning, our members loved the choice and control that direct-to-consumer entertainment offered, including the variety and quality of our titles and the ability to binge watch entire series. DVD paved the way for streaming, ensuring that so much of what we started will continue long into the future. We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees have achieved and excited to continue pleasing entertainment fans for many more decades to come. Thanks to all our employees over the years that worked so hard to build the booster rocket that got streaming to a leading position.”
See also:
Mediaweek’s Top 10 streaming services: Why Binge is still your best value