Netflix reports better than expected despite inflation and post-pandemic
After months of discussions about how the streaming entertainment market will develop after the pandemic lock downs and increasing inflation, Netflix is back with a more optimistic development after reporting heavy loss of subscribers earlier this year. “After a challenging first half, we believe we’re on a path to reaccelerate growth”, the company writes in a letter to shareholders.
The company said it has added 2.4 million households as subscribers July – September which reversed losses during the first half of the year after raising prices in several key markets. The subscriber increase was also much higher than the company’s earlier prediction of plus 1 million. In April, the company reported that it for the first time in a decade had lost subscribers.
Netflix said it will stop reporting projections for subscriber growth. The company said it is “increasingly focused on revenue as our primary top line metric” – a statement related to that Netflix in cooperation with Microsoft starts selling advertising.
After years focusing on subscriber revenues and refusing ads, the company changed its mind after negative developments of the subscriber base after the pandemic. Customers will be able to choose between the ad free version for a higher price and a more budget priced alternative that includes advertising.
When presenting its Q2 report, Netflix announced that it was broadening its revenue stream by going more into gaming. With wider revenue streams including not only gaming but also advertising, the company will focus on reporting revenue instead of subscriber growth.
The overall subscribers now has increased and a huge part of this increase is coming from Asia Pacific. In North America, Netflix lost subscribers in the second quarter and added no more than 100,000 in the third quarter.
After the company’s earlier reports on loss of subscribers, a YouGov survey showed that more women than men in the competitive Nordic markets cancelled their Netflix subscriptions. Value for money seemed to be a driving factor, according to the survey.
When the company now presented its new quarterly report it stressed the importance of its attractive content. Netflix shares jumped more than 10% in after-hours trade.
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