2023-04-18 22:20:26
Netflix, the veteran of streaming, which has undertaken to diversify its sources of income, announced Tuesday on the occasion of the publication of its quarterly results that it would stop by the end of the year its historical service of rental of DVD by mail launched 25 years ago.
The American group launched a subscription DVD shipping service in 1998, a format then in full expansion. The streaming service emerged less than 10 years later in 2007, the BBC recalls, citing a company statement describing DVD rentals as the first stage of the “rocket that made streaming happen”. in a prominent position. However, despite its initial dominant position in the video-on-demand market, Netflix is losing ground once morest certain competitors.
The company also started the year with results without big surprises with 232.5 million subscribers, slightly less than expected by analysts, and a turnover of 8.16 billion dollars for the first trimester. “Our goal has always been to provide the best service to our members, but it has become very complicated with the reduction in this activity,” the company explained in a results press release.
Netflix posted net income of $1.3 billion in the first quarter, down 18% year on year, in line with analyst forecasts. “These fairly lukewarm results do not prove that the company will be able to revitalize its activities with and paid password sharing,” reacted Paul Verna, analyst at Insider Intelligence.
The arrival of , the end of account sharing
After the pandemic euphoria for digital platforms, Netflix has had a very difficult 2022, pushing company executives to focus more on diversifying revenue streams than growing users. In November, they launched a new cheaper subscription, with .
The platform also wants to force users to pay to add profiles to their account, instead of sharing their password for free. This new method is being rolled out but has taken a bit of a delay. “This means that the expected growth in terms of users and revenue will come in the third quarter rather than the second,” the company said.
Read once more: Account sharing: in the confusion, Netflix multiplies the warnings
The American group, which tested this idea in Latin America, had specified in January to expect cancellations of subscriptions. “But as households that were using borrowed IDs from others activate their own accounts and add profiles, we believe our total revenue will increase, which is our goal with these formula changes and price,” Netflix said. Both initiatives “face obstacles and will take time to deploy on a large scale”, regretted Paul Verna.
The TikTok concurrency
Insider Intelligence estimates that Netflix will generate $770 million in revenue in the United States this year, and more than a billion in 2024. The Disney + platform also added a new formula with at the end of the year. But according to the research firm, competition also plays out, and above all, with other entertainment services.
In March, the firm predicted that by 2024 adult American TikTok users will spend more than 58 minutes a day on average on TikTok, just behind Netflix (62 minutes), and far ahead of YouTube (48.7 minutes).
Analysts also mentioned the “second screen” phenomenon: “Viewers are often on TikTok while Netflix is playing in the background. Advertisers considering buying on Netflix should be aware that some viewers may be distracted to the point of dropping their streaming program. Spencer Neumann, the chief financial officer of Netflix, had indicated in January that he hoped that would quickly represent 10% of turnover to begin with, and “much more followingwards”.
Read also: Canal+ achieves a nice coup by joining forces with Apple
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