Netflix continues to grow and benefits from advertising business
Netflix recently counted 8 million new subscriptions, almost half of which included advertising. Further growth is expected from users of traditional television
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Netflix continued to grow in the second quarter of this year, both in terms of the number of subscribers as well as revenue and profits. According to the streaming provider, subscriptions with advertising continue to be popular as they are offered at lower rates. Netflix plans to continue its growth trend by taking market share from traditional linear television and other streaming providers.
The streaming provider points out that Netflix and YouTube together account for less than 20 percent of US consumers' television viewing time. This was determined by market researchers from Nielsen. Streaming providers would account for a total of 40 percent, while conventional cable TV and radio television together would account for 57 percent. This is where Netflix sees its growth potential. Instead of attacking YouTube, traditional TV users are to be won over by Netflix, as well as subscribers to other streaming services.
The smaller streaming providers compared to Netflix have recently been offering customers, particularly in North America, packages of streaming and other services at lower prices, for example in the mobile sector or combined subscriptions to two or more streaming services. Netflix rejected the latter. As the market leader, Netflix is not in a position to be combined with other streaming services.
Netflix now with almost 278 million subscriptions
Netflix refers to the 277.7 million subscribers it now has. That is 16.5 percent more than a year ago. Eight million new customers have been added in the last three months alone. Of these, over 45 percent have booked subscriptions with advertising. However, new customers are also being urged to do so. Recently, Netflix even canceled ad-free basic subscriptions to move subscribers to other tariffs at higher prices or with advertising.
However, these advertising rates are still not offered in all markets, meaning that Netflix still has growth potential in this segment. The streaming provider is also still experimenting with advertising, for example while viewers pause a stream. Advertising is not the primary driver of revenue growth this year and next, Netflix explains, as this area is still being expanded.
Revenue increases, profits even significantly
Nevertheless, Netflix was able to increase its revenue in the second quarter of 2024 by 16.8% year-on-year to 9.6 billion US dollars. Operating profit jumped by 42.4 percent year-on-year to 2.6 billion dollars. As a result, the operating margin rose from 22.3% a year ago to 27.2%. Net profit even rose by 44.3 percent to 2.15 billion dollars. However, the stock market reacted cautiously. The share price initially fell slightly in after-hours trading, but ultimately closed down less than 0.1 percent.
In Europe alone, Netflix achieved sales of over 3 billion dollars for the first time. Subscription figures here rose by 17.7 percent within a year to almost 94 million. Most recently, 2.24 million new customers were added. However, Netflix is growing more slowly on the old continent than before. In the four previous quarters, the market leader's growth rates were always higher. In addition, revenue per subscription is declining. New European customers are therefore apparently opting for cheaper tariffs.
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