Form is temporary, class is permanent, as they say in sport – but perhaps they should say it in the entertainment industry, too.
After losing a combined 1.2 million subscribers during back-to-back quarters of decline in 2022, Netflix has seemingly bounced back with a Q3 earnings report that bodes well for its fortunes in 2023 and beyond.
Between July and September this year, Netflix added a whopping 2.4 million subscribers to its pool of paying customers – a figure that takes its global subscriber count to a new high of 223 million. The record-breaking form of Stranger Things season 4, coupled with the similarly triumphant success of Monster: The Jeffrey Dahmer Story during the same three-month period, helped Netflix reach the milestone.
Purple Hearts, The Gray Man and Extraordinary Attorney Woo were also crucial in helping the streamer recoup its losses, and all told, Netflix says that revenue, operating income and membership exceeded its own forecasts in Q3 2022. For context, company executives had hoped to add 1 million new subscribers between July and September.
“After a challenging first half [of the year], we believe we’re on a path to reaccelerate growth,” Netflix said in a statement accompanying the results. “The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join and stay with us.”
Netflix has suffered in the face of increased expenditure from rival streamers like Prime Video, Disney Plus, and HBO Max in recent months, while cost of living crises in many regions have forced consumers to limit their monthly spending on entertainment content.
But Netflix bosses know where they stand in an ever-expanding streaming industry. “Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard,” Netflix said in its latest earnings report. “We estimate they are all losing money, with combined 2022 operating losses well over $10 billion versus Netflix’s $5 to $6 billion annual operating profit.”
That operating profit only looks set to balloon in the coming year, too. Not only is Netflix ramping up its crackdown on account sharing in a bid to boost revenue, but the streamer is also preparing to launch a cheaper, ad-supported subscription tier to ease the pain on subscribers’ wallets and its own bottom line.
Netflix has confirmed that this cheaper Netflix plan – set to cost $6.99 / £4.99 / AU$6.99 per month – will launch in the US, UK and Australia on November 3, offering customers a more affordable way to watch Netflix at the expense of seeing four to five minutes of ads per hour.
Will it prove a success? Only time will tell, but the surprisingly large uptake of a similar subscription tier at HBO Max is promising.
In any case, Netflix seems to have steadied its ship – at least for now. Of course, mega-hits like Stranger Things and Monster: The Jeffrey Dahmer Story don’t come around every month, and the company would be wise to avoid complacency, but at least Netflix has returned to the sort of financial stability that saw it able to produce bold new movies and TV shows on a regular basis.
