Netflix’s record high of 232.5 million subscribers in 1st quarter of 2023, ad-supported tier shows promise

Netflix has announced that its number of subscribers hit a record high of 232.5 million in the first quarter of 2023. In addition, the streaming giant's nascent ad-supported tier is showing promise.

Netflix reported a quarterly profit of $1.3 billion, which was in line with expectations.

Netflix delays crackdown on password sharing to improve experience

However, the company has postponed a broad crackdown on sharing of account passwords to improve the experience for members, an NDTV report stated.

Instead, it expects to begin rolling out options for paid password sharing this quarter. This has meant that some membership and revenue benefits from the move were postponed, according to a letter to shareholders.

Ad-Supported tier engagement above expectations

Although Netflix's ad-subsidized subscription tier is still in its early days, engagement is above initial expectations, and the company has seen "very little switching" from its standard and premium plans. Insider Intelligence has predicted that Netflix will generate $770 million in ad revenue from the new tier this year, with that figure expected to rise to over $1 billion next year.

As growth at Netflix cooled last year, the company focused on creating a lower-priced subscription tier with advertising. It also sought to encourage people who were watching for free with shared passwords to begin paying for the service without alienating subscribers.

Digital video consumption shifts: US adults spend more time on Netflix and YouTube than traditional TV

US adults are expected to spend more time this year watching digital video on platforms like Netflix, TikTok, and YouTube than traditional TV, according to Insider Intelligence. For the first time ever, "linear TV" is forecast to account for less than half of daily viewing, dropping to under three hours. Meanwhile, average daily digital video watching is projected to reach 52.3% with 3 hours and 11 minutes.

Insider Intelligence principal analyst Paul Verna said that this milestone is due to people spending more time watching video on both their biggest and smallest screens, whether it's an immersive drama on a connected TV or a viral clip on a smartphone. Netflix and YouTube are "neck and neck" leaders when it comes to digital video audience attention, according to Insider Intelligence.