Netflix said on Thursday that its membership growth slowed substantially over the summer, indicating that the massive benefits from the video-streaming service’s crackdown on freeloading consumers are cooling off.
Netflix added 5.1 million customers over the July-September period, a 42% decrease from the same period previous year. Nonetheless, the company’s revenue and earnings increased faster than analysts expected, according to FactSet Research.
Netflix had 282.7 million global customers as of September 30, far surpassing any other streaming provider.
The Los Gatos, California, corporation earned $2.36 billion, or $5.40 per share, a 41% increase over the same period last year. Revenue increased 15% from a year ago to $9.82 billion. Netflix management estimated that revenue would climb at the same 15% year-over-year rate during the October-December period, which was somewhat better than analysts had anticipated.
Netflix’s Subscriber Growth Is Slowing, But Its Profit And Stock Price Are Still Surging
The robust financial performance in the previous quarter, combined with the bullish prognosis, overshadowed any concerns about slowing subscriber growth. Netflix’s stock price increased by about 4% in extended trading following the release of the statistics, adding to the company’s more than 40% gain this year.
Subscriber increases in the previous quarter were the lowest recorded in any three-month period since the beginning of last year. That drop-off shows Netflix is entering a new phase after benefiting from a prohibition on the once-common practice of sharing account passwords, which allowed an estimated 100 million users to watch its popular service for free.
The crackdown, prompted by a rare loss of subscribers following the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 to this June — an average of more than 7 million per quarter — while many of its industry rivals struggled as households cut back on discretionary spending.
“That’s why accelerating growth via advertising becomes paramount to Netflix’s go-forward strategy,” Proulx told the crowd.
Netflix’s Subscriber Growth Is Slowing, But Its Profit And Stock Price Are Still Surging
As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV shows and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for eating hot dogs in a showdown with his longtime rival Takeru Kobayashi.
Netflix will try to draw more viewers this quarter with a fight on Nov. 15 between former heavyweight champion Mike Tyson and Jake Paul, a YouTube celebrity turned boxer, as well as two National Football League games on Christmas Day.
SOURCE | AP
