Seema Shah · April 2023
MMM: Netflix Q1 2023 Earnings Results and Trends
Netflix reported 1.7 million new subscribers in Q1 2023, falling short of the expected 2.3 million. The company has stopped providing guidance for this metric. The decline in subscribers was in line with Sensor Tower mobile monthly active user estimates, which fell by 2%. Netflix has delayed the implementation of password sharing restrictions from Q1 to Q2, with revenue impacts expected in Q3. The company also saw a decline in streaming memberships in Latin America, with user churn increasing to 19% in March 2023. Sega has acquired Rovio Entertainment for $776 million, giving it access to the popular Angry Birds franchise.
Key Takeaways:
Netflix reported 1.7mn new subscribers, vs. 2.3mn expected. As a reminder, the company no longer provides guidance for this metric. The QoQ deceleration was on trend with Sensor Tower MAU estimates (mobile MAUs -2%)
Netflix announced that it had delayed the implementation of password sharing restrictions from 1Q to 2Q (with revenue impacts now expected in 3Q), an effort first launched in LatAm beginning in May 2022
LatAm was the only region in 1Q23 to see a quarterly decline in reported streaming memberships, falling 450k QoQ. ST MAU estimates for Netflix in LatAm fell 3% QoQ while user churn in the market has been creeping higher over the past year, sitting at 19% as of Mar’23 compared to 16% in Jun’22 (one month post-password sharing), and 14% in Jun’21
Netflix also implemented paid sharing in Canada and New Zealand during the quarter (starting the week of Feb 6) and has since seen WAUs decline 18% and 7%, respectively, as of the week of April 10
Sega agreed to purchase Rovio Entertainment for ~$776mn last week. This acquisition provides Sega with popular existing IP in Rovio’s Angry Birds franchise that can be leveraged across multiple channels (such as the Angry Birds mobile games, films, or merchandise) and geographies to generate revenue
Sega’s current mobile portfolio brought in ~$436mn in in-app bookings in 2022, -3% YoY, a solid performance but largely lagging behind domestic rivals in Japan where it generated 91% of in-app bookings during the year. By acquiring Rovio (which brought in $243mn in in-app bookings in 2022, flat YoY growth), Sega now becomes a much more formidable player in the global mobile gaming market with pronounced exposure to western markets
For more information, request the full report from reports@sensortower.com.
