Netflix reported its second-quarter earnings Thursday, adding 8 million subscribers and expanding its lead as subscription streaming TV’s dominant platform.The company now has 277 million global subscribers. Netflix said last quarter that it will stop reporting subscriber numbers and average revenue per member beginning in the first quarter of 2025.Netflix reported revenue of $9.56 billion and operating income of $2.6 billion, both up substantially from a year earlier. The company bested Wall Street expectations, but saw its share price slump after hours as it predicted slower growth moving forward, as its paid-sharing efforts begin to deliver diminishing returns.In its forecast, the company says that it is estimating 14 percent revenue growth in Q3, with lower paid net additions compared to Q3 last year, “which had the first full quarter impact from paid sharing.”The company also revealed in its shareholder letter that it was working on designing a new TV homepage, what they are calling “our biggest update in a decade.”“This new interface provides more visible title information at a glance — including synopsis, genre and ratings,” the company wrote. “Title previews are also larger and more dynamic, with more immersive trailers and bigger box art to make browsing easier. We’ve also simplified the navigation bar and moved it to the top of the page to create quicker, easier short cuts. And this new design includes My Netflix, which has everything members have saved or watched and was previously only available on mobile.”And as usual, Netflix executives had a few words about the competition. The company noted that, according to Nielsen’s Gauge, it and YouTube are really the only scaled players in streaming video, with each having more viewing minutes than Prime Video, Hulu and Disney+ combined.“The challenge for so many of our competitors is that while they are investing heavily in premium content, it’s generating relatively small viewing on their streaming services and linear continues to decline,” the company notes. So going forward, “we believe our biggest opportunity is winning a larger share of the 80%+ of TV time (primarily linear and streaming) that neither Netflix nor YouTube has today.”In other words, as co-CEO Ted Sarandos said on the earnings call, the company is focusing its efforts on other TV and streaming viewers that it can poach, rather than focusing on YouTube.One thing that it will not be doing, however, is launching a streaming bundle directly with one of its video competitors. In a section titled “partnerships,” Netflix noted that while it is happy to partner with mobile providers, pay TV operators and device manufacturers on offerings and packages, “we haven’t bundled Netflix solely with other streamers like Disney+ or Max because Netflix already operates as a go-to destination for entertainment thanks to the breadth and variety of our slate and superior product experience.”“This has driven industry leading penetration, engagement and retention for us, which limits the benefit to Netflix of bundling directly with other streamers,” it continued.On the earnings call, advertising was one of the top questions, with co-CEO Greg Peters noting that the company will be testing its in-house ad tech in Canada this year, before rolling out globally next year. Netflix also revealed Thursday that Peter Naylor, one of its top ad sales execs, would depart the company.On the call, Sarandos also addressed the use of generative artificial intelligence, and what role it would play at Netflix.“I think that AI is going to generate a great set of creator tools, a great way for creators to tell better stories,” Sarandos said. “And one thing that’s sure, if you look back over 100 years of entertainment, you can see how great technology and great entertainment work hand in hand to build great big businesses.“There’s a lot of filmmakers and a lot of producers experimenting with AI today,” he added. “They’re super excited about how useful a tool it can be, and we’ve got to see how that develops before we can make any meaningful predictions about what it means for anybody.”
© 2024 The Hollywood Reporter.