What a difference two years can make. In April 2022, after a heady era of staggering spending and explosive growth, Netflix posted its first subscriber loss in 10 years. Then it shed a million more subscribers over the next few months. The only silver lining at the time? That it didn’t lose the full 2 million previously projected.
Cut to April 2024, however, and Netflix has flipped the script, exceeding blockbuster expectations for its first-quarter earnings. So far, the top global streamer fetched a whopping 9.3 million new subscribers this year, five times as many as in the same period last year, bringing its total to nearly 270 million overall. These numbers confirm that Netflix has kept up the momentum from its mammoth gain of 13.1 million new subs last fall, marking an astonishing rebound.
Some credit for the recent surge surely goes to conversation-generating 2024 series including The Gentlemen, 3 Body Problem, and Avatar: The Last Airbender. (More recent fare, such as Steven Zaillian’s fabulous Ripley and OJ: Made In America, which Netflix nimbly acquired in the wake of the controversial figure’s death, landed on the platform in Q2.) What’s truly driving the growth, though, is a series of savvy moves the streamer has made in the past year or so, some of which foreshadow even brighter days ahead for the company—and its subscribers.
THE PASSWORD CRACKDOWN WORKS
Netflix once cheekily tweeted, “Love is sharing a password.” That was back in 2017, though, when there were dramatically fewer competitors. Netflix’s share of the streaming market in 2019 was a massive 48%; last year, it hovered at 26%. As the environment changed, so too did Netflix’s ambivalence about password-sharing, until the company formally cracked down on the practice last May. Subscribers, instead, suddenly had the option to add one extra member to a standard plan for an additional $7.99 per month. While some sharers soon found a way to circumvent the crackdown, enough of them went the extra-member route to bring Netflix a gain of nearly 6 million subscribers in the months just after. The crackdown was a shrewd move, but it was such a success that Max announced last month an imminent crackdown of its own, with Disney+ following suit in June. (If you can’t beat ‘em, repeat ‘em.)
AD-SUPPORTED PLANS ADD NEW VIEWERS
Just as the password project marked a reversal of a strongly held previous position, so too did the company’s embrace of ad-supported tiers. Co-CEO Reed Hastings long declared Netflix would never sell ads—something he admitted was a mistake as the new plans launched in November 2022. In the year and a half since then, his flip-flop only seems wiser. The ad-supported plans, which start at $6.99 per month, brought in 23 million subscribers as of January. They account for 40% of new subscriptions in markets where they’re available. (Interestingly, the company announced in its earnings report that it will no longer report quarterly membership numbers starting in the first quarter of 2025, as it looks to put more emphasis on metrics like revenue.)
Don’t expect the ads to stop there, though. Back in January, the company announced its boldest foray yet—into the live-sports space—with a $5 billion deal for exclusive rights to the WWE’s marquee wrestling series, Raw, starting in 2025. The move is widely expected to woo not just more subscribers—sorry, USA Network!—but a fortune in advertising revenue.
LESS IS MORE
As first-time filmmaker Cord Jefferson accepted his Oscar for best adapted screenplay last month, he used his platform to make a plea for more mid-budget movies. “Instead of making one $200 million movie,” he urged all executives watching, “try making 20 $10 million movies.” It’s a concept Netflix looks to be taking to heart going forward. New film chief Dan Lin arrived at the company on April 1, reportedly with a mandate to reduce costs and beef up quality. Say goodbye to forgettable zillion-dollar romps like Red Notice, starring Ryan Reynolds and Dwayne Johnson, and say hello to the Gillian Anderson-led journo-thriller Scoop and the Lindsay Lohan rom-com, Irish Wish.
While in previous times, the company might have put up a hefty spend for the prestige of making Francis Ford Coppola’s Megalopolis a Netflix Original, but that is no longer the case. Netflix seems newly unconcerned with pedigree-based bragging rights, and more focused on feeding every segment of its massive viewership. Even before this new less-is-more era officially begins, however, a great contraction is already well underway. Netflix launched 130 fewer movies and TV shows in 2023, a 16% decrease from the previous year—and a far cry from the overstuffed 2021 slate that precipitated the company’s first subscriber loss in a decade.
LICENSE TO THRIVE
While Netflix is paring back its budget for original films, the company is still investing handsomely in licensing rights for existing hit series. Last year, it turned USA’s 2010s’ hit Suits into a bona fide phenomenon, becoming the most-streamed show over the course of a year in the history of Nielsen’s rankings. But Suits wasn’t the only beloved series to migrate to the streamer with much fanfare recently. Last year, HBO ended its long-held refusal to license titles to Netflix, lending out shows like Insecure, Six Feet Under, and Sex and the City. Not only were several of these shows top-10 hits on Netflix, according to the New York Times, they represent “further evidence that Netflix is benefiting from the tight financial situation that many of its rivals are confronting.”
Indeed, perhaps the most impressive aspect of Netflix’s recent rebound is that it comes as streaming growth is down and the rate of churn is rising. As streamers continue to clash in an existential struggle for more eyeballs, consumers are struggling to decide which ones are worth holding onto. Which ones other than Netflix, that is.
