Today: November 9, 2024
Netflix reported that it added 5.1 million streaming subscribers in the third quarter, topping Wall Street estimates by more than 1 million. The company’s ad-tier subscriptions jumped about 35% in the third trimester, and 4 out of 10 new subscribers in eligible markets chose the ad-supported tier. The company said subscribers spend about two hours per day watching Netflix.
The company also expected higher customer growth around the holidays when the Korean drama “Squid Game” returns. The popular show’s second season is scheduled to drop on Dec. 26, and the company plans to broadcast a third and final season in 2025. The show focuses on people who play children’s games for money and touches upon themes like “money problems” and “unfairness in society, which are universal,” the company said.
In addition to a growing library of original content, Netflix has made forays into live sports and events this year. The streamer is set to begin streaming WWE professional wrestling events in early 2025 and has a deal to broadcast NFL games on Christmas Day. It also plans to livestream the Mike Tyson vs. Jake Paul fight and two other events later this year. Analysts say those moves should boost engagement and attract more subscribers.
Despite the growth, Netflix faces several challenges, including adversity from traditional Hollywood studios that have launched rival services to compete with the upstart. Netflix co-founder Reed Hastings has implemented several initiatives, such as cracking down on password sharing and launching an ad-supported tier. However, the company’s rivals are gaining ground, and many investors worry that it will take a lot of work for Netflix to maintain its current pace of subscriber growth.
Netflix shares rose 4.8% in after-hours trading on Thursday following the earnings report. The stock has gained about 47% so far this year.
The SVOD giant’s global revenue grew by 19% to $5 billion in the quarter, and it posted a profit of $1.6 billion, or $1.29 per share, beating expectations of $1.25 per share. The company expects full-year revenue to be more than $28 billion, compared to its previous forecast of $26.7 billion. The company also raised its guidance for ad-supported subscribers. It now expects ad-supported subscriptions to account for about 50% of all new signups in countries with the available ad-supported option. That compares to about 30% in countries with the available ad-supported tier. The company doesn’t expect ad sales to become its primary revenue source until 2026. Netflix will stop reporting subscriber numbers starting in 2025 and instead focus on financial metrics. Subscriber numbers have been a volatile metric for the company. The company has reported slowing subscriber growth and had to raise prices on its premium (no-ads) plans. This helped it increase the average revenue per member.
Alex Blige is a bestselling author and expert on various topics. With over a decade of experience in the field, Alex has helped thousands of people achieve their goals and improve their lives. With a degree in computer science and a background in journalism, Alex brings a unique perspective to his work. He has written several blogs on topics ranging from mindfulness to productivity, and is a sought-after speaker and coach.