Netflix - the streaming giant continues to grow

Solid profits for the future

Overall, for 2023 Netflix is expected to grow its user base to 251.15 million, a nice 8.8% increase from around 230.75 million subscribers in 2022.

The company's revenue growth is expected to average 12% annually over the next four years. That's higher than the projected 8% annual average subscriber growth. [1]

In terms of Netflix's revenue, the streaming platform generated $31.61 billion in revenue this past year, 2022, and projections show that in 2023, revenue will increase by about 7%, or reach a level of about $33.7 billion. [2]

The composition of revenue generated by Netflix globally in Q2 2023 shows the dominance of the US and Canada region with a market share of 47%. This is followed by the Europe, Middle East and Africa region with 31%, the Latam region (12.9%) and Asia Pacific (11.3%).

Sources of most revenue

From the numbers above, it logically follows that the majority of Netflix subscribers were from the United States and Canada (75.57 million subscribers). Subscribers from the United States and Canada also generated the highest average monthly revenue per customer for Netflix - at $16.37. Netflix's average revenue per user in Europe, Africa and the Middle East was slightly lower at $10.87. However, this represents a remarkable year-on-year increase of 16%. Revenue per customer in the Latin America, Asia Pacific region was around US$8.3.

Conversion to paying customers

According to Netflix, roughly 100 million users worldwide stream its services through borrowed accounts. Whether the company will continue to do well in the future will largely depend on how it deals with the problem of these non-paying customers.

Netflix has decided to crack down on the password-sharing problem, which the company says has in practice affected as many as one in two subscribers.

The level of 5.9 million paying customers that Netflix acquired in Q2 2023 (up from 1.75 million in Q1 2023) was achieved in part thanks to freeriders choosing to stay on the platform and pay for their own account.

The number of average daily registrations has thus more than doubled compared to the period before the changes.

In addition, a new test programme that has been launched in the Chilean, Costa Rican and Peruvian markets indicates a change in strategy to monetise its services more effectively. Under this program, subscribers can add "sub-accounts" for up to two people they do not live with for a fee of about $3 per month.

Netflix's stock performance over the past 5 years. Source: tradingview.com *

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Adam Austera, Principal Analyst at Ozios

* Past performance is no guarantee of future results

[1,2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate or based on the current economic environment, which may change. Such statements are not guarantees of future results. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.