Netflix reported Thursday that its subscriber growth slowed dramatically over the summer, a sign that the huge profits from the video streaming service’s crackdown on freeloaders are tapering off. are.
The 5.1 million subscribers Netflix added from July to September was a 42% decrease from the total number of subscribers it added during the same period last year. Still, the company’s sales and profits grew faster than analysts expected, according to FactSet Research.
Netflix had 282.7 million subscribers worldwide at the end of September, far more than any other streaming service.
The Los Gatos, Calif., company’s profit was $2.36 billion, or $5.40 per share, up 41% from a year earlier. Sales increased 15% year-on-year to $9.82 billion. Netflix executives expect the company’s revenue to grow at a 15% pace from a year ago in the October-December period, slightly higher than analysts expected.
Strong financial performance over the past quarter and positive outlook have allayed concerns about slowing subscriber growth. Netflix shares rose nearly 4% in after-hours trading after the data release, on the back of a more than 40% rise in the company’s stock so far this year.
The past quarter’s subscriber growth was the lowest in three months since early last year. This decline comes as Netflix’s once-rampant ban on account password sharing has allowed an estimated 100 million people to benefit from the ability to watch the popular service without paying. It shows that.
The crackdown, which began in 2022 after a rare drop in subscribers due to the pandemic, helped Netflix gain 57 million subscribers from June 2022 to June of this year. It averaged more than 7 million people per quarter, while many of its industry rivals struggled. This is because households curbed discretionary spending.
Netflix’s profits were also driven by a lower-priced version of its service that included commercials for the first time in the company’s history. Although the company still derives only a fraction of its revenue from two years of advertising, Netflix is increasing its focus on that line of business in an effort to boost profits.
In a letter to shareholders, Netflix reiterated previous cautions about expanding into advertising, even though lower-priced options, including commercials, are the fastest growing segment.
“We still have a lot of work to do to improve our service for advertisers, and this will be a priority in the coming years,” Netflix executives said in the letter.
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As part of its evolution, Netflix is increasingly supplementing its lineup of scripted TV series and movies with live programming. For example, a Labor Day spectacle in which famous glutton Joey Chesnutt sets a world record for hot dog consumption in a showdown with his longtime nemesis. Takeru Kobayashi.
During the quarter, Netflix will feature a match between former heavyweight champion Mike Tyson and YouTube sensation turned boxer Jake Paul on Nov. 15, and two National Football League matches on Christmas Day. We are trying to attract more viewers.
