During its latest earnings report, Netflix announced that it has added 8.76 million global streaming paid net subscribers during the third quarter of the year, reaching a total of 247.15 streaming paid memberships worldwide. This is the biggest quarterly net add total for the streamer since it added 10.1 million subscribers in the second quarter of 2020 – when Covid restrictions kept people home.
Netflix's third-quarter financials were in line with forecasts, with revenue of US$8.5 billion and an operating margin of 22.4%. The company now expects a 20% operating margin for the first half of 2023 (the high end of its 18% to 20% range). Moreover, according to the company, adoption of its ads plan continues to grow — with ads plan membership up almost 70% quarter-over-quarter.
Regarding content, during this period, Netflix continued to focus on improving its slate, with new originals and licensed titles from around the world. In the third quarter, these included English language hits like “One Piece” (season 1), “The Witcher” (season 3), “Top Boy” (season 3), “Sex Education” (season 4), “Love at First Sight,” and “Suits,” among others.
“The last six months have been challenging for our industry given the combined writers and actors strikes in the United States. While we have reached an agreement with the WGA, negotiations with SAG-AFTRA are ongoing. We are committed to resolving the remaining issues as quickly as possible so everyone can return to work making movies and TV shows that audiences will love,” the streamer said in its earnings report.
● PRICE HIKE
Also during its third quarter earnings report for 2023, Netflix announced the increase of its prices in the United States, the UK and France. In its local market, the platform’s Standard with ads plans and its Standard without ads plans will remain the same at US$6.99 and US$15.49 a month, respectively. However, its Basic plan has jumped to US$11.99 a month – an increase of US$2 – and Premium is now US$22.99 a month – an increase of US$3 a month.
As for the UK and France, the new prices will be £4.99 and €5.99 for the Standard with ads, respectively; £7.99 and €10.99 for the Basic; £10.99 and €13.49 for the Standard without ads; and £17.99 and €19.99 for the Premium. Just like in the United States, the Standard with ads and the Standard without ads plans will remain the same price as before.
● THE IMPACT ON ORIGINAL CONTENT
Netflix kicked off the final media earnings cycle of 2023 in a position of strength compared to its competition, but with major questions regarding the value of its prodigious library and how it contributes to future growth in a more challenged marketplace, Parrot Analytics analyzed in its latest report.
“With one half of Hollywood’s dual labor stoppage over, the industry hopes to get productions back on track in the final quarter of the year. Regardless of when the studios and actors reach an agreement, the impact on original content will continue to be felt well into 2024, with Netflix’s flagship original ‘Stranger Things’ among the many prominent series that will have an extended delay between seasons,” Parrot Analytics said.
The Hollywood shutdown – along with companies cutting back on spending – has already impacted the supply of streaming original content. In fact, the growth rate in the global supply of new streaming original series has shrunk during all three quarters of 2023, with Q3 experiencing the sharpest drop off so far.
With less volume, hit rates become even more integral to a successful platform which requires an efficient and effective combination of acquisition, retention and engagement titles. According to Parrot, in order to feed the platform until productions start up again, the company can rely in expanding its sports docu-series slate or imitating the model it had with “Suits,” which demonstrated Netflix’s ability to dominate pop culture without even releasing a new show.
“Netflix is still the dominant media company heading into the end of 2023 and beyond. It has the scale to get cultural credit for its rivals’ content, a more cost-effective way to win over sports fans, and above all, Netflix remains the only major company that is consistently profiting from the streaming business,” Parrot concluded.