Netflix: The Saga Continues

By the end of 2024, Netflix had over 300 million subscribers in 190 countries. Netflix estimates that this translates to an audience of roughly 700 million people. Last week, Netflix released their Q1 2025 results, reporting revenue of $10.5 billion, up 12.5%. Operating income was $3.3 billion, representing an operating margin of 31.7%, up from 28.1% in the same quarter last year. Netflix has set a goal of doubling its current revenue by 2030. 

Over the last few years, Netflix has steadily increased the prices for their services. In the US, the price of the standard plan rose from $13.99 in 2019 to $17.99 this year, a 28% increase. Netflix has also kept its content spending relatively stable, which has allowed the company to increase profitability substantially. Two years ago, Netflix cracked down on password sharing. According to Netflix, this had a net positive impact, as more people created their own accounts compared to those who left the platform entirely. 

A core pillar of Netflix’s strategy is to fund and create original content. This approach gives them full creative control and rights, enabling them to produce more content centred around their intellectual property without incurring substantial leasing costs. Netflix has had significant success with this strategy, creating shows like Stranger Things and Squid Games, which have become culturally significant shows with large fanbases. Netflix has also refused to lease its content to other platforms. This strategy has helped Netflix draw in and retain customers despite the intense competition.  

However, Netflix still faces stiff competition from other streaming platforms, linear TV, and the entertainment industry as a whole. The risk is that Netflix might lose its ability to engage subscribers, leading to non-renewals. However, as it stands, the company is in a strong position. The market values Netflix highly, with a price-to-earnings ratio of over 45.