After adding 9.33 million subscribers in the first quarter of this year, the world’s largest streaming service added another 8.05 million subscribers in the second quarter.

Its revenue increased 17 per cent to A$14.27 billion. It ended the quarter with 277.7 million customers worldwide.

The surge in subscriber numbers beat Wall Street estimates by a huge margin. Analysts expected the streaming service to add only 4.87 million subscribers in the second quarter.

Netflix’s crackdown on password sharing coupled with the introduction of a lower-priced subscriber plan with advertising resulted in it posting its second-best first half, behind only 2020 when its numbers climbed sharply as the pandemic lockdowns initiated globally.

The company’s cheapest ad-supported plan – which costs A$7.99 in Australia – accounted for almost half of sign-ups last quarter in markets where it’s offered. Netflix said that it expects to have a large enough base next year to appeal to major sponsors. Its ad-supported plan has around 40 million global monthly active users — up from just 5 million a year ago.

May 3, 2017, Barnaul Russia. A young man watches Netflix on his TV and at home.

For Q3 2024, Netflix has forecast revenue growth of 14 per cent year-on-year and expects paid net additions to be lower than Q3 2023. However, for the full year 2024, Netflix expects revenue growth of 14-15 per cent, up from 13-15 per cent previously, reflecting “solid membership growth trends and business momentum”, partially offset by the strengthening of the US dollar against most currencies.

Management at the company has indicated that there’s plenty more room to grow. It says that there are still 500 million homes with smart TVs that haven’t signed up for a Netflix subscription, indicating a possibly huge untapped base for the company.

By next year, Netflix will stop reporting its subscriber numbers. Advertising is expected to be a major revenue driver for Netflix going forward. It will launch an in-house advertising technology platform by the end of 2025.

“The near-term challenge (and medium-term opportunity) is that we’re scaling faster than our ability to monetise our growing ad inventory,” said Netflix.