After a slow start to the year, the streaming giant Netflix wants to take more decisive action against free riders. The company announced that the offensive against the sharing of passwords should finally pick up speed in this quarter.
Netflix assumes that around 100 million households use the service with other people's login data. In the future, you should also pay for sharing. Netflix is also ending a relic of the past that started the company's history: DVD rentals.
In the first quarter, the online video service increased customer numbers by 1.75 million to 232.5 million user accounts, as announced on Tuesday after the US stock market closed. Experts had expected a much stronger increase. The outlook for the current quarter was also mixed. Netflix only expects an upswing in the second half of the year - also thanks to the action against password sharing. Another growth driver is the cheaper subscription tariff with advertising that was launched in November.
DVD rental is ending
In the three months to the end of March, Netflix increased sales by almost four percent year-on-year to $8.2 billion. However, the profit fell by around 18 percent to a bottom line of 1.3 billion dollars. In the current second quarter, Netflix does not expect any major leaps - revenue and net income are likely to stagnate more or less at the level of the previous quarter. The annual report was initially not well received by investors. The stock was temporarily down more than 10 percent in the after-hours trading. However, the price largely recovered relatively quickly.
Netflix also announced yesterday that it would end its DVD rental business after around 25 years. Shipping by post was the original business model of the company founded in 1997. Legend has it that Netflix's story even began with a rental video. Founder Reed Hastings misplaced a video cassette and was annoyed by the video store's overdue fines, as he later said. This gave rise to the business idea of a DVD flat rate. In the streaming age, however, this service hardly played a role anyway. Netflix justified the end with the low usage.