Netflix once more outperforms financial anticipations of investors.
Netflix Continues to Thrive: Despite anticipation, Netflix outdid analysts by selling over half a million additional subscriptions than predicted in the final quarter. This surge in subscribers isn't just because of the service's recent crackdown on password sharing. Boosted by the success of the crime drama "The Perfect Duo" and the romantic comedy "Nobody Wants This," Netflix has once again managed to attract a substantial number of new customers. The streaming platform's earnings for the quarter also surpassed expectations. After the stock market closed in the US, the company declared, "We've successfully re-accelerated growth and are eager for a stellar fourth quarter." Investors welcomed this news, causing the stock to jump around 4% during after-hours trading.
Netflix has added five million users in recent months, with one million more subscribers than what experts predicted. However, the growth seen in previous quarters has significantly decreased. The service has put a stop to password sharing and introduced cheaper, ad-supported subscription plans, which led to a substantial number of new customers initially.
Currently, about 282.7 million households worldwide subscribe to Netflix, using the service for an average of two hours every day. For the upcoming quarter, Netflix has projected an increase in customer growth, but without providing specific numbers. "Netflix is determined to maintain a steady increase in the number of subscribers at a healthier pace," announced Jeff Wlodarczak, an analyst from Pivotal Research. This substantial user base can then be utilized by Netflix to boost subscription costs and advertising earnings.
Advertising Revenue Becoming More Significant
Netflix anticipates that its ad-supported offerings will yield long-term profits, as revenue per user is typically higher than from subscription fees alone. However, a substantial growth in advertising revenue is not predicted before at least 2026. In the last quarter, more than half of the new subscribers opted for the ad-supported access.
To keep these users engaged for as long as possible, Netflix is starting to emphasize live events and sports broadcasts. A boxing match between YouTube sensation Jake Paul and former champion Mike Tyson is scheduled for November. Starting in December, the streaming service will also air selected games from the US football league, NFL. "Advertisers want to participate in significant cultural events," stated Mike Proulx, chief analyst at Forrester Research. "Live programming that captivates audiences and unites them is always popular and provides a captive audience primed for marketing messages."
The surge in new Netflix subscribers has been partly attributed to the success of its ad-supported subscription plans, with over half of the recent subscribers choosing this option. Netflix's strategy of offering live events and sports broadcasts, such as the upcoming boxing match between Jake Paul and Mike Tyson, aims to keep these ad-supported users engaged and attracted to advertising revenue.
