Despite rising subscription prices, reduced production due to Hollywood’s double strikes in 2023, and the implementation of that pesky one-size-fits-all house rule to crack down on password sharers, Netflix had great wins in the third quarter of this year.
The Ted Sarandos-run streamer, home to TV heavyweights Stranger Things, Cobra Kai, and Emily in Parisreported revenue growth of 15% with total revenue of $9.825 billion, exceeding Wall Street analysts’ expectations of about $9.77 billion. (By comparison, the third quarter of 2023 brought in $8.54 billion.) Additionally, Netflix added 5.1 million subscribers from the previous quarter, bringing its overall global subscriber total to 282.7 million. Ad tier subscriptions increased 35% quarter over quarter, and by letter sent to shareholdersAdvertising-tier subscriptions accounted for more than half of all subscriptions during Q3 (in the 12 countries where it is currently available – some, like Canada, will only see the service rolled out in late 2024 through 2025).
“Engagement on Netflix is healthy: on average about two hours per day per paid subscription, despite the impact of paid sharing,” the letter stated. “When you isolate the owning families (which excludes the impact of paid sharing), the viewing hours of these owning families increased year over year in the first three quarters of 2024.”
What this means for Netflix
Streamer’s Future Looks Bright
The company also touted during its earnings report that buzzy new series like Nicole Kidman and Dakota Fanning, led by The perfect couple and the return of 2000s teen heartthrob Adam Brody in Nobody wants that alongside Kristen Bell helped increase audience retention, as did the return of Eddie Murphy in Beverly Hills Cop: Axel F. Sarandos noted that overall production improved during the July to September period of the year despite Patchier Netflix programming in 2024 after the setbacks caused by the SAG-AFTRA and WGA strikes in 2023, and that by 2025 production should return to normal.
Netflix expects your Q4 scores to be even higherending the year with US$ 10.13 billion, building anticipation for the second season of the global sensation squid game and broadcast live sporting events, such as two NFL games on Christmas Day and a boxing match between YouTube star Jake Paul and legendary boxer Mike Tyson. The company stated during its earnings report that it intends to make live events an ongoing priority and revenue generator, considering the gaming and advertising business as another part of that (although it admitted that its advertising-level associations were not the main driver of growth in 2024, and they also do not foresee it being in 2025).
“The short-term challenge (and the medium-term opportunity) is that we are growing faster than our ability to monetize our growing ad inventory,” Added Netflix’s quarterly letter to shareholders. And not everything in the third quarter was rosy: there was a slight net loss in member signups in Latin America due to increases in subscriptionsand the subscriber curve in the United States has been stable but flat. (Notably, Netflix will no longer report the number of subscribers and average revenue per member starting in the first quarter of 2025, as its executives argue that it is not the most reliable metric for diagnose the streamer’s financial health.)
Netflix is so confident in his clean bill of health, in fact, which is predicting that the full year 2025 will bring between US$43 billion and US$44 billion– this could mean an increase of over 10% or more depending on how strong 2024 is.
Read a full transcript of Netflix’s Q3 2024 earnings call here.
Source: Netflix