(San Francisco) Netflix had promised a million but it was finally some 2.4 million additional subscribers who joined the platform this summer, a victory for the streaming leader which took drastic measures after losing nearly 1, 2 million subscribers in the first half.
Posted at 4:20 p.m.
Updated at 5:26 p.m.
“Thank God we are done with the quarters in decline,” exclaimed Reed Hastings, the co-founder of the Californian group, during a conference for analysts on Tuesday.
In all, according to its results release, Netflix now has more than 223 million subscribers, thus exploding its record at the end of 2021 (221.8 million), the result of two years of pandemic ultra favorable to entertainment platforms.
And he’s betting on 227.6 million total subscribers by the end of the year.
Reed Hastings called his company’s results and forecast “not fantastic, but reasonable.” “We must continue this momentum,” he added.
For the current quarter, the service can count on the return of popular series such as “Emily in Paris” or “The Crown”, but also on its new cheaper subscription with advertising, available in a dozen countries from November.
Netflix has long refused this less prestigious solution, but the platform now hopes to attract new consumers and earn additional revenue thanks to this new offer.
This formula should be “a game-changer in terms of expansion”, reacted Jamie Lumley, analyst at Third Bridge.
“Refuse the world”
“And we think Netflix is going to be able to charge advertisers more than YouTube or traditional TV because the platform has both a diverse and loyal subscriber base and a safe environment for brands,” said he commented.
Company executives would not comment on rumors of high prices for commercials, but said customers were on board.
“We’re having to turn people away right now,” COO Greg Peters said, noting that Netflix and Microsoft, its advertising technology partner, would have to hire new staff to keep up with demand.
The American group, usually reluctant to compare itself to other platforms, welcomed the fact that its users spend more time on its service than those of its competitors, citing figures from Nielsen.
According to the research firm, in August and in the United States, Netflix accounts accounted for 7.6% of time spent watching television, the equivalent of YouTube and well ahead of Amazon Prime Video (2.9% ) and Disney+ (1.9%).
“Our competitors are investing heavily to gain subscribers and engagement time, but […] we believe they are all losing money,” the industry veteran said in his statement.
Netflix made a net profit of $1.4 billion for the June-September period, instead of the $966 million expected by the market. Its turnover stood at 7.9 billion dollars.
On Wall Street, its title jumped about 14% in electronic trading after the closing of the New York Stock Exchange.
“New Reality”
“By directly recognizing (the importance) of competition and using advertising, Netflix is adapting to the new reality of the streaming industry”, considers Ross Benes, analyst at Insider Intelligence.
In the spring, after the announcement of its first loss of subscribers for ten years, the platform had taken various measures to reverse the trend, in addition to its decision on advertising.
The group plans in particular to tighten the screw at the beginning of next year on the side of the sharing of identifiers and passwords, which allow many people to access the content of the platform without paying.
Netflix conducted tests in South American countries: account holders paid less than $3 per month to add up to two people.
After feedback, “we are moving towards this approach which seems balanced to us”, indicated Greg Peters.
Preventing the unbridled sharing of passwords “has enormous revenue potential,” noted Jamie Lumley. “However, our experts are skeptical about the chances of success, both from a technical point of view and from that of reluctant users, which was observed during the tests”, he detailed.
As a first step towards the new system, Netflix on Monday introduced a new tool so that users who share an account can transfer their profile (along with their preferences and history) when they sign up for their own subscription.