Executives at Netflix say the streaming service added 2.4 million paid customers in the three-month period ending September 30, erasing a substantial drop in subscribers over the previous two financial quarters.
The information was shared Tuesday as part of the streaming company’s quarterly earnings report, which showed Netflix’s subscriber growth was well ahead of the guidance it gave investors several weeks ago.
Though Netflix made up for its losses this quarter, the company’s global growth remains relatively flat when compared to the previous quarter, with the service counting just over 223 million paying subscribers around the world. Last year, the company said it had more than 213.5 million global subscribers.
“After a challenging first half, we believe we’re on a path to re-accelerate growth,” executives said in a letter sent to shareholders on Tuesday. “The key is pleasing members.”
But pleasing members is only one half of the answer. The other involves pleasing investors, who have been anything but during the first half of this year when Netflix said it was losing customers.
Media analysts said several factors were to blame for Netflix’s drop in paid subscribers, including rising subscription fees and limited programming. Netflix charges $15.50 a month for access to high-definition video and $20 a month for ultra-high definition (UHD/4K) video streams, both of which are commercial-free. By contrast, HBO Max, Amazon Prime Video and Hulu’s ad-free tiers are all slightly cheaper than Netflix, and all includes access to UHD streams of supported content.
Netflix addressed the price pain point by announcing plans to introduce a lower-cost plan supported by advertisements. That plan launches in early November for $8 a month.
Executives have also addressed a trend of Netflix customers sharing their passwords with freeloading streamers, a practice the company once mildly embraced. Earlier this year, Netflix rolled out a feature that allowed customers in several Latin American countries to pay extra for the privilege of sharing their passwords beyond their immediate household. A similar feature is expected to roll out more broadly next year.
What won’t change in the long-term is Netflix’s commitment to releasing episodes of a series at one time, with company officials saying they believed heavily in the “binge” model.
“It’s hard to imagine, for example, how a Korean title like ‘Squid Game’ would have become a mega hit globally without the momentum that came from people being able to binge it,” executives wrote in their letter to shareholders. “We believe the ability for our members to immerse themselves in a story from start to finish increases their enjoyment but also their likelihood to tell their friends, which then means more people watch, join and stay with Netflix.”
Netflix (Q3 2022)
- 223.1 million subscribers globally
- UP from 220.7 million subscribers reported in Q2
- UP from 213.57 million reported in Q3 2021
- 73.34 million subscribers in the United States and Canada
- UP from 73.24 million subscribers reported in Q2
- DOWN from 74 million reported in Q3 2021
- 104,000 net additions in the United States and Canada
- UP from a loss of 1.3 million reported in Q2
- DOWN from 73,000 reported in Q3 2021
- Average global ARPU of $11.03
- DOWN from $11.16 reported in Q2
- UP from $10.95 reported in Q3 2021
- United States and Canada ARPU of $16.37
- UP from $15.95 reported in Q2
- UP from $14.68 reported in Q3 2021
(Source: Netflix quarterly earnings reports, as reviewed by The Desk)