Netflix’s earnings outlook: navigating growth beyond password sharing

Netflix’s strategy to maintain subscriber growth after two-quarters of blockbuster gains will be emphasized when it reports profits on Thursday. Some critics warn that returns from a crackdown on password sharing are set to reduce.

As Netflix prepares to release its earnings report, all eyes are on the streaming giant’s performance in the wake of its crackdown on password sharing and its efforts to sustain growth. 

Here are five key factors to watch out for:

1. Subscription Growth in the March Quarter

Analysts anticipate Netflix to add approximately 5 million subscribers in the first quarter of 2024, a significant uptick from the previous year. However, this growth is expected to taper off compared to the surge seen in the latter half of 2023.

2. Impact of Original Content

Netflix’s original productions like “Fool Me Once” and “Griselda” have resonated well with audiences, contributing to its streaming dominance. Additionally, licensed content such as “Grey’s Anatomy” continues to attract viewers, underscoring Netflix’s diverse content strategy.

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3. Projections for the Second Quarter

Looking ahead, analysts project Netflix to gain 3.7 million subscribers in the second quarter of 2024. While this forecast reflects ongoing growth, it also suggests a moderation compared to previous quarters.

4. Continued Focus on Password-Sharing Crackdown

Netflix’s global crackdown on password sharing, initiated in May 2023, has been a driving force behind its recent growth spurt. However, questions loom about the sustainability of this strategy, particularly in mature markets like the United States.

5. Market Saturation Concerns

Analysts express concerns about potential market saturation in core regions, fueled by the password-sharing crackdown. 

While Netflix’s share price surged following the success of this initiative, doubts persist about its long-term viability, especially in saturated markets like the U.S.

As Netflix grapples with evolving consumer behaviors and intensifying competition, its ability to innovate and adapt will be crucial in sustaining its position as a global streaming leader.