Apr 18, 2023 - Technology

Netflix ends DVD biz after 25 years, delays account sharing crackdown

Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images

Netflix on Tuesday said it's ending its 25-year-old mail-in DVD business and delaying plans to crack down on password sharing more broadly until later this year.

Why it matters: The streamer has been looking closely at costs as its growth slows amid greater competition.

  • "Converting moochers into paying subscribers," as J. Clara Chan at The Hollywood Reporter put it, is one way to drive revenue growth.
  • Buying new DVDs have been a big recurring cost for Netflix, while making up just 0.5% of its total revenue.

Details: Netflix said that paid account sharing this year in Canada, New Zealand, Spain and Portugal has initially led to cancellations, but that over time, people ultimately activated their own accounts or added new members.

  • "We found enough improvement opportunities in these areas to shift a broad launch to Q2 to implement those changes," the company said in a statement.
  • As for its DVD business, Netflix says it will conclude on September 29, with final shipments.

The big picture: Netflix shares fell more than 10% after hours before rebounding. The announcements came alongside its first quarter earnings report which reflected mixed results.

  • Revenue increased 3.7% from a year ago, and 3.9% from the fourth quarter of last year — when the streamer launched its ad-supported service.
  • Earnings per share were $2.88, two cents higher than estimates from Refinitiv.
  • Global subscribers grew by 4.9% from a year ago, or 1.75 million from the fourth quarter, for a total of 232.5 million to start the year.

Be smart: Netflix last fall said it will no longer share estimates for subscriber targets as growth has tapered and it seeks to shift attention to financials.

  • This was also Netflix’s first quarter with Ted Sarandos and Greg Peters serving as co-CEO together. Co-founder and previous co-CEO Reed Hastings moved to executive chairman in January.

Go deeper ... Netflix's earnings over the past year:

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