• Netflix reports revenue grew to $8.16 billion on the back of 1.75 million new paid members joining the service.
• While paid sharing does push some members to cancel, the firm notes an increase in memberships and revenue in some markets.
• Netflix will also be shuttering its DVD delivery service in September.

In the midst of several controversies surrounding Love is Blind including a botched livestream event and revelations from participants regarding horrid conditions while filming, Netflix has revealed it’s earnings for the first quarter of 2023.

As a letter to shareholders embedded below reads “In short, we’re off to a good start in 2023. As always, our focus remains pleasing our members and attracting great creators so that we can continue to build a wildly successful business.”

Revenue grew to $8.16 billion which is a 3.7 percent increase compared to the first quarter of 2022. However, it’s shy of the $8.17 billion the streaming giant forecast for this quarter. For Q2, Netflix forecasts revenue of $8.2 billion.

That revenue increase was driven by a 4.9 percent uptick in paid memberships although that only really translates in 1.75 million new paying Netflix members globally. In total Netflix reports that there are now 232.5 million paying Netflix members.

Importantly, memberships in Latin America fell by 400 000. This is important because Netflix is currently testing paid sharing options in the region. All countries where Netflix tested paid sharing – Chile, Peru and Costa Rica – are located in this region which doesn’t bode well for us. Of course, Netflix has said in the past that memberships are only one metric of success for the firm. Of course, Netflix has another explanation, it told shareholders that this dip was due to a “pull forward from Q4 and ongoing macroeconomic softness.”

However, the firm does note later in the letter that paid sharing did lead to “cancel reaction” in that market.

Once this reaction has subsided however, Netflix reports that it sees increased acquisition and revenue as folks who borrowed accounts start activating their own.

The firm saw this behaviour in Canada where it now reports that its paid membership base is larger than before it launched paid sharing and revenue is growing. The firm says this points to how the US market could react but of course it won’t know until it launches paid sharing there. Importantly, Netflix has shifted it’s expectations regarding gains from paid sharing.

“We learn more with each rollout and we’ve incorporated the latest learnings, which we think will lead to even better results. To implement these changes, we shifted out the timing of the broad launch from late Q1 to Q2. While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome for both our members and our business,” Netflix said.

Early reactions regarding paid sharing from US users were severe with threats of outright cancellation coming from many. Again, threats are one thing, the fear of missing out on the next season of Stranger Things is another.

One notable highlight from this earning report is that Netflix will be shuttering its DVD delivery business. The firm will ship its final DVDs on 29th September.

“DVD paved the way for streaming, ensuring that so much of what we started will continue long into the future. We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees have achieved and excited to continue pleasing entertainment fans for many more decades to come. Thanks to all our employees over the years that worked so hard to build the booster rocket that got streaming to a leading position,” Netflix said.

The firm didn’t share how many jobs this shuttering will impact.

It looks as if paid sharing is going to be made available to more markets this quarter so it may be best to have the tough conversation with those borrowing your account now.