Author: guardianpub

Netflix and chill (out), password sharers.

After intense backlash surrounding what appeared to be the first signs of the company’s upcoming password sharing crackdown, Netflix (NFLX) clarified no official announcements have been made outside of the current test countries.

“For a brief time last Tuesday, a help center article containing information that is only applicable to Chile, Costa Rica, and Peru, went live in other countries. We have since updated it,” a Netflix spokesperson told.

Last week’s updates appeared to show the company would require users to identify a “primary location” for all accounts that live within the same household. News which had users suggesting this would be a bridge too far, and threatening to leave the platform as a result.

Users would then need sign into the home Wi-Fi of the primary location at least once every 31 days to ensure their device is not blocked. Temporary codes would need to be used for traveling members, which would only remain valid for seven consecutive days

Netflix said it would use information such as IP addresses, device IDs, and account activity to determine whether a device signed into the account is connected to the primary location.

In a recent survey, investment firm Jefferies highlighted concerns surrounding the company’s crackdown on password sharing, particularly among the account freeloaders Netflix hopes to convert.

According to lead analyst Andrew Uerkwitz, about 62% of the 380 Netflix password borrowers surveyed said they would stop using Netflix once the crackdown takes effect.

Only 10% of those polled said they would move to create their own account for $9.99 a month, hinting password borrowers don’t see enough value in the platform. The survey also suggested competitors could greatly benefit from Netflix’s crackdown.

Some 35% of respondents said they can replace Netflix with another service, while another 31% added they don’t enjoy the content enough to justify paying for it.

When asked which platforms users would use more frequently if they eliminated Netflix, the top streaming alternatives included Amazon Prime Video (42%), Hulu (35%), and Disney+ (26%).

In its quarterly letter to shareholders published last month, Netflix said it would be intensifying its push to combat password sharing in Q1, although the streamer did not provide details on when exactly that would occur and what countries would be impacted.

“Later in Q1, we expect to start rolling out paid sharing more broadly. Today’s widespread account sharing (100M+ households) undermines our long term ability to invest in and improve Netflix, as well as build our business,” the company wrote.

Netflix’s password crackdown, coupled with its recently launched ad-supported tier, have been looked at as meaningful profitability drivers, especially as competition within the streaming space escalates: “As always, our north stars remain pleasing our members and building even greater profitability over time.”

Netflix reported subscriber net additions of 7.66 million in Q4, above company guidance for 4.5 million amid a slew of high-profile and record-breaking content releases, including “Glass Onion,” “Troll,” “All Quiet on the Western Front,” “My Name is Vendetta,” and “Wednesday.”

“The bottom line is there’s a massive amount of password sharing, particularly among affluent people,” told Jason Helfstein, head of internet research at Oppenheimer.

“We do think a good chunk of [Netflix] subscribers will probably pay more to keep certain members of their household, or let’s say their children who no longer live with them, on their plan,” he continued.

Helfstein, who described the crackdown as a “net positive” in the long term, added Netflix, “would not be doing this if they thought they would end up in a worse revenue situation.”

“This is a company that historically has prided itself on customer service, above all,” Helfstein said.

“The reality is people have taken advantage of it. Sharing your Netflix account with 20 other people is probably not what the company had in mind, [but] if people are reasonable and share this with five, six people in their family? I think it’s going to work out.”

Source: finance.yahoo.com

Alphabet Inc on Thursday posted fourth-quarter profit and sales short of Wall Street expectations as Google’s advertising clients pulled back spending from a period of pandemic-led excess.

Executives of the search and advertising giant adopted a subdued tone on a call with investors, promising an extended period of belt-tightening, particularly on hiring, real estate costs and experimental projects that can take years to reach fruition.

Shares of Alphabet were down nearly 5% in after-hours trading, after losing about 40% of their value in 2022.

“We are committed to investing responsibly with great discipline and defining areas where we can operate more cost- effectively,” Chief Executive Sundar Pichai told analysts on a call to discuss the company’s results. That echoed comments from Meta Platforms Inc boss Mark Zuckerberg the previous day on cost efficiencies.

Shares of other tech companies Apple Inc and Amazon.com Inc also fell after they posted disappointing results on Thursday, wiping off gains after Facebook parent Meta on Wednesday boosted tech shares with news on cost cuts and a large buyback.

Gone was some of the exuberance of the pandemic when consumers flocked to the internet amid lockdowns and heightened interest in e-commerce and touchless deliveries.

Alphabet’s chief financial officer, Ruth Porat, promised a more measured approach for 2023 and a focus on “delivering sustainable financial value,” not necessarily a hallmark of Silicon Valley firms. “We’re focused on revenue upside as well as durable changes to the expense base.”

Advertisers, who contribute the bulk of Alphabet’s sales, have cut their budgets as rising inflation and interest rates fueled concern over consumer spending.

Pichai pointed to advertisers’ more modest spending and the impact of foreign exchange rates abroad as drags on Alphabet’s overall results.

He said artificial intelligence (AI) software will be an important focus for the company and that it plans to make its LaMDA chatbot software publicly available in the coming weeks.

LID ON COSTS

Mountain View, California-based Alphabet decided to cut 12,000 jobs last month, representing about 6% of its overall workforce, and said it was doubling down on AI. Across the company, Alphabet will “meaningfully” slow its pace of hiring this year, said Porat.

Alphabet, long a leader in AI, is facing competition from Microsoft Corp, which is reportedly looking to boost its stake in ChatGPT – a promising chatbot that answers queries with human-like responses.

“Despite being seen as one of the most insulated companies in the advertising space relative to peers, Alphabet’s poor quarter is the latest sign that worsening fundamentals and a tough macroeconomic environment are prompting advertisers to cut back on spending,” said Jesse Cohen, senior analyst at Investing.com.

Net income fell to $13.62 billion, or $1.05 per share, from $20.64 billion, or $1.53 per share, a year earlier. That was the sharpest decline for Alphabet in four quarters.

Adjusted profit of $1.05 per share fell short of an expected $1.18 per share, according to Refinitiv.

Revenue from Google advertising, which includes Search and YouTube, fell 3.6% to $59.04 billion. Total revenue rose 1% to $76.05 billion, its slowest growth ever barring a small decline in the second quarter of 2020. Analysts were expecting $76.53 billion.

Google is the world’s largest digital ad platform by market share, making it uniquely susceptible to fluctuations in online marketing spending. Its YouTube division has faced a surge in rival platforms, particularly TikTok, whose endless scroll of short video is drawing younger users away.

Alphabet’s Porat said the company’s total capital expenses this year will be in line with last year. As more of its employees work remotely and it consolidates staff, Alphabet expects to pare back its real estate expenses, which Porat said would result in a charge of roughly a half-billion dollars in this year’s first three months.

Revenue from YouTube ads, one of Alphabet’s most consistent money-makers, fell nearly 8% to $7.96 billion, well below the estimate of $8.25 billion, according to FactSet.

Cloud was a bright spot, however, with revenue growing 32% to $7.32 billion, but at its slowest pace since the company began disclosing the segment’s revenue numbers.

But there may be more pain ahead for Alphabet. Late last month, the Justice Department and eight states sued Google over what they said were anticompetitive practices in its digital ad sales. The company is facing multiple lawsuits, which, if successful, could cause it to be broken up.

Source: finance.yahoo.com