We’re Watching Now, Netflix

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What's going on?

Netflix reported much better-than-expected results late on Tuesday.

What does this mean?

Netflix has announced a falling subscriber count for two straight quarters this year, so the odds were stacked against it coming into this earnings season. But it managed to prove everyone wrong: the streaming giant said projects including “The Gray Man” and “Purple Hearts” were real needle-movers last quarter. That helped it add over 2.4 million subscribers last quarter, smashing through its own projection of one million, and in turn pushing its revenue and profit to both tidily beat analysts’ expectations. And since Netflix predicted even more growth this quarter, the news was good enough to convince investors to brush off the company’s worse-than-expected profit outlook: they sent its shares up 14% after the news.

Why should I care?

The bigger picture: Start-stop entertainment.
Netflix will want to keep that subscriber growth going, which might be why it’s decided that downgrading the user experience may be just the way to go. The streaming giant’s bringing forward the launch of its ad-supported service to next month, in hopes that its lower-cost $6.99 version – which slots about five minutes of commercials into every hour of content – will appeal to bargain-hunting entertainment-seekers who can’t get the same low price from rivals Disney+ or HBO Max. All that cash from advertisers would be a nice bonus too: some analysts predict that could make Netflix around $3 billion in extra revenue by 2025.

Zooming out: Netflix won’t share.
Determined to put an end to the bonding experience of sharing your Netflix password with a special someone, the streaming giant revealed the new “Profile Transfer” feature this week. Netflix would have you believe it’s designed to make big moves and break ups easier by switching your history and recommendations to a new account, but it’s probably a simple bid to clamp down on the more than 100 million households that access the service using shared accounts.

Originally posted as part of the Finimize daily email.

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