Netflix reveals surprising new results

Netflix’s fortunes are turning around.

The American streaming giant has been battling a declining subscriber base all year and now there’s finally good news.

Netflix reported its Q3 results today and not only was it much better than anyone was expecting, it’s reversed its perilous downward trend.

The company added 2.4 million subscribers, more than double the one million it had forecast three months earlier. Among that 2.4 million new accounts were 100,000 in the US and Canada, a mature and saturated market where Netflix has found it increasingly difficult to attract new members.

In Asia Pacific, where Australia sits, subscriber growth was 1.4 million accounts. It revealed

Netflix now has 223.1 million subscribers worldwide. It predicted it would add 4.5 million subscribers in the final quarter of 2022.

Netflix’s share price surged 14 per cent in after-hours trading off the back of its Q3 results, from its closing price of $US240 to $US275.

But it is still significantly down from where it was 12 months ago when the stock price was trading at $US632. That equates to tens of billions of dollars wiped from Netflix’s market capitalisation.

The company named Monster: The Jeffrey Dahmer Story, Stranger Things S4, Extraordinary Attorney Woo, The Gray Man and Purple Hearts as programming highlights for the quarter.

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The Jeffrey Dahmer miniseries has become a pop culture phenomenon, now Netflix’s second most watched English-language original series of all time behind Stranger Things. In the first four weeks of its release, Netflix members watched a collective 701.37 million hours of Ryan Murphy’s dramatisation of one of America’s most notorious serial killers.

Netflix chief financial officer Spencer Neumann said on an earnings call, “We’re still not growing as fast as we’d like. We are building momentum, we are pleased with our progress, but we know we still have a lot more work to do.”

Netflix shocked with its Q1 results in April this year, when it revealed a loss of 200,000 subscribers, the first decline in a decade. It share price plunged and the company lost $US54 billion of its market value that day.

Its Q2 results were technically worse, shedding 970,000 subscribers, but it was fewer than Netflix’s forecast of 2.5 million.

Today’s results will be welcome news for the company’s leadership team, which has been under pressure to turn it around.

The business embarked on a round of redundancies and cut several departments including its animation and editorial divisions, as well as in-production upcoming projects such as Meghan Markle’s series, Pearl.
 

It also confirmed it would introduce a cheaper, advertising-supported membership tier, a reversal of co-founder and co-chief executive Reed Hastings’ previous commitments.

The ad-supported option will be rolled out in the first week of November. In Australia, the cost will be $6.99 per month – the trade-off to those members will be to endure four to five minutes of ads per hour and a stream quality capped at 720p.

Netflix said it didn’t expect a large portion of its project Q4 growth will come from new subscribers on the ad-supported tier.

It said in a statement to shareholders, “While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q4’22 as we’re launching our Basic with Ads plan intra-quarter and anticipate growing our membership in that plan gradually over time.”

Netflix has previously said that despite the lower subscription price on the ad-supported tier, it expected the average revenue per user would still be “neutral or positive”, presumably as a result of the extra revenue stream from advertising dollars.

Netflix’s other tactic in its battle to restore its sheen is the imminent crackdown on password sharing, which Netflix revealed 100 million of its accounts engage in.
 

Netflix’s fortunes are turning around.

The American streaming giant has been battling a declining subscriber base all year and now there’s finally good news.

Netflix reported its Q3 results today and not only was it much better than anyone was expecting, it’s reversed its perilous downward trend.

The company added 2.4 million subscribers, more than double the one million it had forecast three months earlier. Among that 2.4 million new accounts were 100,000 in the US and Canada, a mature and saturated market where Netflix has found it increasingly difficult to attract new members.

In Asia Pacific, where Australia sits, subscriber growth was 1.4 million accounts. It revealed

Netflix now has 223.1 million subscribers worldwide. It predicted it would add 4.5 million subscribers in the final quarter of 2022.

Netflix’s share price surged 14 per cent in after-hours trading off the back of its Q3 results, from its closing price of $US240 to $US275.

But it is still significantly down from where it was 12 months ago when the stock price was trading at $US632. That equates to tens of billions of dollars wiped from Netflix’s market capitalisation.

The company named Monster: The Jeffrey Dahmer Story, Stranger Things S4, Extraordinary Attorney Woo, The Gray Man and Purple Hearts as programming highlights for the quarter.

Stream more entertainment news live & on demand with Flash. 25+ news channels in 1 place. New to Flash? Try 1 month free. Offer ends 31 October, 2022 >
 

The Jeffrey Dahmer miniseries has become a pop culture phenomenon, now Netflix’s second most watched English-language original series of all time behind Stranger Things. In the first four weeks of its release, Netflix members watched a collective 701.37 million hours of Ryan Murphy’s dramatisation of one of America’s most notorious serial killers.

Netflix chief financial officer Spencer Neumann said on an earnings call, “We’re still not growing as fast as we’d like. We are building momentum, we are pleased with our progress, but we know we still have a lot more work to do.”

Netflix shocked with its Q1 results in April this year, when it revealed a loss of 200,000 subscribers, the first decline in a decade. It share price plunged and the company lost $US54 billion of its market value that day.

Its Q2 results were technically worse, shedding 970,000 subscribers, but it was fewer than Netflix’s forecast of 2.5 million.

Today’s results will be welcome news for the company’s leadership team, which has been under pressure to turn it around.

The business embarked on a round of redundancies and cut several departments including its animation and editorial divisions, as well as in-production upcoming projects such as Meghan Markle’s series, Pearl.
 

It also confirmed it would introduce a cheaper, advertising-supported membership tier, a reversal of co-founder and co-chief executive Reed Hastings’ previous commitments.

The ad-supported option will be rolled out in the first week of November. In Australia, the cost will be $6.99 per month – the trade-off to those members will be to endure four to five minutes of ads per hour and a stream quality capped at 720p.

Netflix said it didn’t expect a large portion of its project Q4 growth will come from new subscribers on the ad-supported tier.

It said in a statement to shareholders, “While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q4’22 as we’re launching our Basic with Ads plan intra-quarter and anticipate growing our membership in that plan gradually over time.”

Netflix has previously said that despite the lower subscription price on the ad-supported tier, it expected the average revenue per user would still be “neutral or positive”, presumably as a result of the extra revenue stream from advertising dollars.

Netflix’s other tactic in its battle to restore its sheen is the imminent crackdown on password sharing, which Netflix revealed 100 million of its accounts engage in.
 

The practice has always been against its terms and conditions but wasn’t enforced. Netflix will soon attempt to recoup lost revenue by introducing measures which will ban password sharing.

It has already trialled two different models in select Latin America countries.

Yesterday, it revealed a new feature called “profile transfer” which is designed to allow existing users to migrate their viewing history and algorithm suggestions to their own paid account.

Netflix reported Q3 revenue of $US7.93 billion, up 5.9 per cent year-on-year, marginally higher than Wall Street expectations.

The business also reiterated its commitment to the binge release model (as opposed to the week-by-week model favoured by its competitors including Disney+).

In its shareholder letter, it specifically called out the binge model for driving momentum and interest to Monster: The Jeffrey Dahmer Story and Squid Game.

It wrote, “It’s hard to imagine, for example, how a Korean title like Squid Game would have become a mega hit globally without the momentum that came from people being able to binge it.

“We believe the ability for our members to immerse themselves in a story from start to finish increases their enjoyment but also their likelihood to tell their friends, which then means more people watch, join and stay with Netflix.”