The streaming veteran, which has begun to diversify its revenue streams, further announced Tuesday that it would stop by the end of the year its historic DVD rental service by mail launched 25 years ago.

"Our goal has always been to provide the best service to our members but this has become very complicated with the decrease in this activity," the company said in an earnings release.

Netflix posted a net profit of $1.3 billion in the first quarter, down 18 percent year-on-year, in line with analysts' forecasts.

"These rather tepid results do not prove that the company will be able to revitalize its business with advertising and paid password sharing," said Paul Verna, analyst at Insider Intelligence.

After the euphoria of the pandemic for digital platforms, Netflix had a very difficult 2022, pushing the company's leaders to focus more on diversifying revenue streams than on growing users.

In November, they launched a new, cheaper subscription with advertising.

The platform also wants to force users to pay to add profiles to their account, instead of sharing their password for free.

This new method is being rolled out but has been somewhat delayed.

"This means that the expected growth in terms of users and revenue will arrive in the third quarter rather than the second," the company said.

"Obstacles"

The American group, which has tested this idea in Latin America, had said in January to expect cancellations of subscriptions.

"But as households that used credentials borrowed from others activate their own accounts and add profiles, we think our total revenue will increase, which is our goal with these plan and price changes," Netflix said.

Both initiatives "face obstacles and will take time to deploy on a large scale," Verna said.

Insider Intelligence estimates that Netflix will generate $770 million in advertising revenue in the United States this year, and more than a billion in 2024.

The Disney+ platform has also added a new formula with advertising at the end of the year.

But according to the research firm, competition is also, and especially, with other entertainment services.

In March, the firm predicted that by 2024 U.S. adults using TikTok will spend more than 58 minutes a day on average on TikTok, just behind Netflix (62 minutes), and far ahead of YouTube (48.7 minutes).

Analysts have also mentioned the phenomenon of the "second screen": "viewers are often on TikTok while Netflix plays in the background. Advertisers who are considering buying ads on Netflix should be aware that some viewers may be distracted to the point of abandoning their streaming program," they said.

Spencer Neumann, Netflix's chief financial officer, said in January that he hoped advertising would quickly account for 10% of revenue to begin with, and "much more thereafter".

© 2023 AFP