Netflix Adds 2.4 Million Customers in Third Quarter, Rises to 223M Global Subscribers
Throughout the third quarter of 2022, much of the conversation about Netflix centered around the service’s upcoming ad-supported tier, which will launch Thursday, Nov. 3. However, before the world’s largest streamer officially pivots to having an AVOD (ad-supported video-on-demand) option, it released its Q3 earnings report on Tuesday, and after two consecutive periods of quarterly subscriber losses, Netflix gained 2.41 million subscribers to bring its global total to 223.09 million.
The increase included a 104,000 bump in the United States and Canada to bring the total in the region to 73.39M. The increase in the U.S. and Canada is the first time that Netflix has seen subscriber growth in the combined countries since Q4 of last year; as such, the streamer is still down 1.8M for the year as saturation continues to be an issue domestically.
Netflix had previously forecast just 1M additional subscribers in Q3, meaning that the quarter far exceeded even the company’s own internal expectations. The streaming service is projecting an added 4.5 million customers in the fourth quarter of the year, undoubtedly aided by the launch of its AVOD tier.
The rise represents a 10 million subscriber year-over-year subscriber increase from when Netflix reported 213 million customers following the third quarter of 2021. The streaming giant is the first major platform to announce its updated subscriber numbers, but at the end of Q2 2022, Disney+ reported a total of 152.1 million subscribers globally, while corporate streaming sibling Hulu was at 46.2M worldwide customers.
Following the second quarter, Warner Bros. Discovery reported that HBO Max and discovery+ had a combined 92.1 million subscribers. As part of Paramount’s earnings update, Paramount+ reported having 43M global subscribers thanks to an increase of 5.2M by the end of Q2. Neither Prime Video nor Apple TV+ report subscriber totals.
As the company celebrated its 25th anniversary in August, details of Netflix’s venture into ad-supported streaming came into sharper focus. Earlier this month, the streamer announced that its first-ever ad-supported tier — known as Basic with Ads — would cost $6.99, $3 cheaper than the Basic premium tier. The streamer also confirmed previous reports that customers on this subscription plan would not be able to download content for offline viewing.
Also part of the announcement was that certain titles would not be available on the ad tier and others would to available but without commercials. This is likely to do with concerns over licensing agreements with various content owners that had not been negotiated with the possibility of incorporating ads built in. Netflix has said that it is working to update its contracts with all of its content partners as soon as possible.
There were also reports — which have not yet been confirmed by the streamer — that Netflix will follow the example of other services and not run ads on kids' content or original movies. Both Disney+ and HBO Max have similar philosophies when it comes to their ad-supported tiers.
In July, the streaming giant announced that it had partnered with Microsoft to build its advertising infrastructure, since it had no background in ad sales or delivery, unlike Disney+ — who will launch an ad-tier in December — because of the company’s experience with Hulu and its linear networks. Netflix said that while the partnership with Microsoft will strictly be focused on streaming advertising, there is potential for a more well-rounded relationship in the future.
Analysts have been all over the map in terms of how the new ad-supported suƒbscription option will impact Netflix’s subscriber totals and revenue. However, the streamer reportedly expects to add 40 million customers to the new tier by next year and it is expected that by 2027, Netflix could increase its revenue by $5.5 billion. One concern that some onlookers have about the launch of the new subscription plan is that it could cannibalize its higher-priced premium plans. A recent analysis estimates that 60% of the streamer's subscribers could opt for the lower-priced option in the next five years.
However, that type of movement isn’t expected to hamper Netflix’s overall standing in the industry as the service is still projected to remain the world's largest streamer in 2027 and even with a majority of customers choosing the cheaper plan, when coupled with advertising sales, Netflix stands to actually make more money per subscriber than it did as a premium-only service.
With nearly every survey and study that is released, the reason that consumers say that they keep Netflix as a must-have service is its plethora of content. The third quarter was buoyed by historic releases, including the latest season of “Stranger Things” and the massively popular “Dahmer – Monster: The Jeffrey Dahmer Story.” To keep customers happy, the streamer announced that it would keep its content spending in the $17 billion per year range through 2023, despite many of its competitors pulling back in that regard. Netflix continues to lead the content wars especially when it comes to international content and its anime library.
On the heels of its second-quarter earnings report, the streamer also announced that it had acquired animation studio Animal Logic. While Netflix will continue to work with other animation companies, and Animal Logic will continue to partner with other studios, this will almost assuredly lead to an increase in animated films coming to the platform will only help hook and retain the ever-important family demographic that nearly every streaming service is looking to court.
However, content is not exclusively the series and movie titles that the service is known for. In addition, Netflix continued to invest in mobile gaming last quarter, establishing its own internal gaming studio while also giving consumers more privacy and social currency with gamer handles.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.