The streaming juggernaut, which reached 223 million global paying customers, announced that it will discontinue providing guidance for paid subscribers starting in the following quarter as it shifts its attention to income.
In the third quarter, Netflix added 2.4 million new customers, a significant improvement for the streaming juggernaut after a year of sluggish growth.
The streaming service currently has just over 223 million customers, and it expects to get 4.5 million more in the fourth quarter. While the Asia Pacific area contributed 1.4 million paying subscribers, Netflix only experienced a tiny increase of 100,000 new subscribers in the United States and Canada. While the EMEA region accounted for 570,000 of Netflix’s quarterly subscriber additions, Latin America brought in 310,000 new subscribers.
The third quarter’s total revenue was $7.92 billion, slightly less than the second quarter’s total but up 5.9 percent over the previous year.
The financial results released on Tuesday mark Netflix’s first subscription growth of the year. Due to layoffs and a reduction in corporate spending growth, Netflix lost 970,000 customers during the second quarter and 200,000 subscribers during the first quarter. These losses caused the stock price of the company to drop.
The corporation has had to focus on advertising for the first time as a result of the subscriber losses. Netflix had previously stated that its ad-supported tier would debut in early 2023, but the streaming service has accelerated that date and is now set to introduce a $6.99/month ad-supported subscription tier on Nov. 3. This will be about a month before Disney+ introduces its own ad-supported tier for $7.99/month on Dec. 8.
In order to achieve this, Netflix signed a contract with Microsoft to power its advertising technology, hired Snap’s chief business officer Jeremi Gorman and vice president of sales Peter Naylor to oversee the project, and agreed to use Nielsen in the United States and the non-profit BARB in the United Kingdom to gauge viewership for its advertising.
The streamer’s increasing crackdown on account sharing, the most recent upgrade of which includes a new feature pushed out on October 17 that will allow users to transfer their profiles to a new membership account, are among its other monetization initiatives. Netflix claimed in a letter to shareholders accompanying its earnings report that it had “landed on a sensible method to monetize account sharing” that permits both profile transfers and the addition of “sub-accounts” by primary account holders should they choose to pay for family and friends. These adjustments will be implemented more widely starting in the first quarter of 2019, according to the letter.
Additionally, Netflix announced that starting in January 2019, when it releases its Q4 earnings, it will stop offering paid subscriber guidance as it shifts its focus to income. For sales, operating income, operating margin, net income, EPS, and fully diluted shares outstanding, the corporation will still provide guidance.
Regarding the growth of Netflix’s game selection, there are now 35 games you may play, including versions of Oxenfree, Nailed It!, and The Queen’s Gambit as well as games based on these films. Under addition to the 55 games now in production, Netflix stated that it anticipates having more than 50 games available by the end of the year.
Wall Street emphasis will be on streaming services’ ability to maintain subscriber gains despite an economic slowdown and management signals that content investment would be more restrained as Netflix kicks off Hollywood’s third quarter earnings season. The share price of Netflix has decreased by roughly 60% since the start of this year’s trade.
