Netflix announced its second-quarter earnings on Thursday, revealing an addition of 8 million subscribers and solidifying its position as the leading subscription streaming TV platform.
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| Netflix offices in Los Angeles. PHOTO BY MARIO TAMA/GETTY IMAGES |
The company now boasts 277 million global subscribers. Netflix also announced that starting in the first quarter of 2025, it will no longer report subscriber numbers and average revenue per member.
Netflix reported revenue of $9.56 billion and an operating income of $2.6 billion, both significantly higher than the previous year. Although the company exceeded Wall Street expectations, its share price declined in after-hours trading due to a forecast of slower growth as its paid-sharing initiatives begin to yield diminishing returns.
In its forecast, Netflix estimates 14 percent revenue growth in Q3, with fewer paid net additions compared to the same quarter last year, “which had the first full quarter impact from paid sharing.”
The company also revealed in its shareholder letter that it is working on a new TV homepage, described as “our biggest update in a decade.”
“This new interface provides more visible title information at a glance — including synopsis, genre, and ratings,” the company wrote. “Title previews are also larger and more dynamic, with more immersive trailers and bigger box art to make browsing easier.
We’ve also simplified the navigation bar and moved it to the top of the page to create quicker, easier shortcuts. And this new design includes My Netflix, which has everything members have saved or watched and was previously only available on mobile.”
As usual, Netflix executives had a few words about the competition. The company noted that, according to Nielsen’s Gauge, it and YouTube are the only scaled players in streaming video, each having more viewing minutes than Prime Video, Hulu, and Disney+ combined.
“The challenge for so many of our competitors is that while they are investing heavily in premium content, it’s generating relatively small viewing on their streaming services and linear continues to decline,” the company noted. Moving forward, “we believe our biggest opportunity is winning a larger share of the 80%+ of TV time (primarily linear and streaming) that neither Netflix nor YouTube has today.”
In other words, as co-CEO Ted Sarandos mentioned on the earnings call, the company is targeting other TV and streaming viewers to attract, rather than focusing on YouTube. However, one strategy Netflix will not be pursuing is launching a streaming bundle directly with one of its video competitors.
In a section titled “partnerships,” Netflix noted that while it is happy to collaborate with mobile providers, pay TV operators, and device manufacturers on offerings and packages, “we haven’t bundled Netflix solely with other streamers like Disney+ or Max because Netflix already operates as a go-to destination for entertainment thanks to the breadth and variety of our slate and superior product experience.”
“This has driven industry-leading penetration, engagement, and retention for us, which limits the benefit to Netflix of bundling directly with other streamers,” the statement continued.
During the earnings call, advertising was a prominent topic, with co-CEO Greg Peters noting that the company will be testing its in-house ad tech in Canada this year before rolling it out globally next year. Netflix also revealed that Peter Naylor, one of its top ad sales executives, would be leaving the company.
Sarandos also addressed the role of generative artificial intelligence at Netflix. “I think that AI is going to generate a great set of creator tools, a great way for creators to tell better stories,” he said. “And one thing that’s sure, if you look back over 100 years of entertainment, you can see how great technology and great entertainment work hand in hand to build great big businesses.
“There’s a lot of filmmakers and a lot of producers experimenting with AI today,” he added. “They’re super excited about how useful a tool it can be, and we’ve got to see how that develops before we can make any meaningful predictions about what it means for anybody.”
