The streaming platform Netflix released its Q1 2024 financial report in mid April. The financial report shows that Netflix's revenue for the quarter was $9.4 billion, and its operating profit was $2.6 billion, both significantly increasing compared to the same period last year. It is expected that revenue will increase by 16% in the second quarter. Due to seasonal factors, the net growth rate of paid users will be lower, but this year's revenue will increase by 13% -15% for the entire year.

The financial report also shows that Netflix added 9.3 million new subscribers in the first quarter of 2024. As of now, the company has a global user base of 269.6 million, further expanding its leading position in the industry. In recent quarters, Netflix has been able to add millions of users every quarter, and in the fourth quarter of last year, it added 13 million users.

Netflix confirmed in its financial report that it will cease disclosing the number of users and average revenue per user starting from 2025.

The growth in user numbers was once the main factor driving up Netflix's market value. Since the launch of Netflix's streaming platform, its user base has been on the rise, leading to a continuous rise in stock prices. The continuous growth of users has driven Netflix's ambition to not only increase investment in original content, but also expand its services to more countries and regions, attracting more users. With the repeated release of Netflix user data, doubts from Wall Street capital have dissipated, and competitors are catching up. Disney CEO Bob Eager even believes that the future of Disney and even Hollywood is pinned on the development of streaming media.

During the COVID-19, the number of users of the global streaming media platform soared, and the share price of Netflix once soared to more than $700 in October 2021. With the gradual weakening of the impact of the epidemic, the high growth of users is clearly unsustainable. Since then, Netflix's stock price has begun to decline. The first quarter financial report released in April 2022 showed that the growth in user numbers was lower than expected, and Netflix's stock price once dropped to around $160.

Although Netflix's stock price has recently rebounded to over $550, the company's co CEOs Ted Sarandos and Greg Peters have not forgotten the lessons of 2022. They have foreseen future trends and hope to establish new narratives to increase imagination space for stock prices.

Over the past year, Netflix has made efforts to crack down on password and account sharing practices, which has led to significant user growth.

In addition, the pricing of membership levels is significantly different from before. Greg Peters emphasized during the earnings conference call that "the company has improved its pricing strategy, developed a tiered plan, and pricing will vary for different countries and regions. In the future, Netflix's pricing will become increasingly differentiated." In other words, in the past, Netflix's subscription prices in various markets were roughly the same, and this strategy will change in the future. In some countries and regions, Netflix may reduce subscription fees by increasing advertising volume. Greg Peters summarized, "In the past, we used a simple algorithm to measure our business, which is multiplying the number of members by the monthly fee price. This algorithm is becoming increasingly inaccurate in reflecting the company's business situation. In the future, we will periodically update user data, especially when the number of users reaches a significant milestone, we will definitely disclose it to the public, but this data will not become a fixed component of regular financial reporting."

In fact, keeping the number of users confidential has been Amazon's practice for many years. This technology giant is very secretive about the number of users of its Prime Video, but every few years, when the number of users reaches a certain level worth showing off, Amazon will vigorously promote it.

From its own perspective, Netflix also hopes that Wall Street will stop focusing on user numbers and instead focus on other indicators such as revenue, profit, and user activity.

Jessica Reeve Erich, an analyst at Bank of America, believes that "although Netflix doesn't have to worry about user growth yet, the significant slowdown in user growth in 2022 is still an 'untimely bomb', which may be a precursor to a future slowdown in user growth."

In its letter to shareholders, Netflix also discussed its future plans - plans to further expand its advertising business. In the first quarter, the number of advertising supported users increased by 65% year-on-year. The company's senior management predicts that advertising business will become an important contributing factor to profitability from 2025 onwards. It is foreseeable that once advertising revenue accounts for a certain proportion of total revenue, Netflix will start reporting advertising revenue separately. As new and existing users continue to shift towards subscription advertising supported members, Netflix's advertising revenue is bound to continue to rise.

In addition, Netflix has stated that it will adjust its entertainment content to include "more exciting film and television programs, more fun games, and more must see live programs.". According to Ted Sarandos during a conference call, Netflix will be committed to creating "a range of sustainable, reliable, and audience expected popular dramas, movies, and games. This is Netflix's core business, and we are committed to creating such content every day, and we are creating such content around the world.".

Sarandos also talked about the company's strategy in sports and live programs, "We are developing our own live or live programs, although they are still in the early stages, this is an important part of strategic expansion."

Sarandos also stated that Netflix's current focus is on sustained profit growth, with the first key indicator being to increase user engagement, revenue, and profit. If Netflix finds opportunities to drive the development of the above three aspects, it is willing to explore diversification in the increasingly diverse field of high-quality entertainment content.

Of course, Netflix has not forgotten to boast and proudly points out that the company is currently a leader in the streaming field, claiming to have over 1 billion followers on social media and full of confidence in its marketing capabilities. "Our most direct promotional tool is Netflix itself, which has become the preferred platform for many people looking for entertainment programs. On this platform, trailer views can reach hundreds of millions, and the combination of influence, recommendation, and fan base is difficult to replicate. Netflix's ability to integrate stories into mainstream culture is unmatched by few."

As one of the giants in the streaming field, Netflix certainly knows how to tell stories that are captivating. But one year from now, Netflix will end its crackdown on password and account sharing behavior, and user growth is likely to slow down or even decrease again; From then on, Netflix needed to tell a new story to Wall Street.