Ban on password sharing works: Netflix exceeds audience growth target

According to the results of the third quarter, Netflix increased its subscriber base by 5.1 million, exceeding the expectations of Wall Street analysts by more than 1 million. During the holiday season, when the second season of the Korean series “Squid Game” is released, the platform expects even more active subscriber growth. After the publication of the quarterly report, Netflix shares rose 4.8%; since the beginning of the year they have risen in price by 47%.

Image source: freestocks/unsplash.com

Subscriber growth is slowing, and Netflix is ​​looking to shift investors’ focus from sign-ups to metrics like revenue growth and profit margins. Starting next year, the company will stop publishing subscriber data altogether. In the third quarter, 50% of users who registered in countries where it is available chose the ad-supported plan.

Netflix’s subscriber growth has slowed. Image source: reuters.com

At the end of the reporting period, the company earned $5.40 per share, which is higher than the forecast of analysts, who expected $5.12. Operating margin was 30%, down from 22% a year earlier. Revenue reached $9.825 billion – Wall Street expected $9.769 billion. Customer growth exceeded the 4 million expected from Netflix, but the 5.1 million new subscribers shown by the platform was less than 8.76 million in the same period last year. The company expects that in the traditionally strong fourth quarter it will exceed the results of the third quarter.

Netflix’s revenue is showing solid growth. Image source: reuters.com

Netflix has ramped up its original production following delays caused by last year’s Hollywood strikes. Engagement, or time spent viewing the platform, averaged two hours per day. The number of users who chose the ad-supported plan has increased, but the company does not expect it to become a major driver of growth until 2026. An important aspect of the development strategy is live broadcasts, including sports competitions. In October, Netflix raised prices in Japan and several European countries; Today tariffs will rise in Spain and Italy. The platform has no plans to include subscriptions in its discount package along with other video streaming services owned by Walt Disney and Warner Bros. Discovery, said company CEO Ted Sarandos.