(New York) Netflix made a new show of strength on Wednesday, with better-than-expected quarterly results and a jump in subscribers, despite the fierce competition raging in streaming.
Quarter over quarter, the Los Gatos, California, giant gained 8.76 million subscribers, reaching 247.1 million at the end of September. Over one year, its portfolio grew by 10.8%, according to a press release.
Netflix puts the strong increase in subscribers down to its content and the rise of streaming on a global scale, but also to the success of its new pricing for accounts shared between several users.
At the end of May, the platform implemented this billing for sharing identifiers with people who are not members of the household in around a hundred countries.
According to Netflix estimates, before this development, more than 100 million households let other people use their accounts.
The group indicates that the subscription cancellation rate linked to this billing “remains low, below what we anticipated,” according to the press release.
Furthermore, the proportion of people switching from using identifiers from another household to a paid subscription is “considerable”.
The cannonball results propelled the stock, which was up more than 12% in post-hours electronic trading on Wall Street.
“Netflix appears to have overcome the difficulties it experienced in early 2022,” commented Third Bridge analyst Jamie Lumley. At the time, the group had experienced a slowdown in its growth, which was quickly interpreted as the end of an era.
In addition to growth, the platform displays insolent profitability, at a time when its major competitors, Disney in the first place, are seeking to evolve their economic model to make it profitable.
Netflix has therefore raised its operating margin forecast for its entire 2023 financial year to 20% from now on, i.e. the top of the initially targeted range of between 18% and 20%.
The online video service sees it improving significantly further in 2024, between 22% and 23%.
Netflix took advantage of the publication of its results to announce an increase in some of its prices in the United States, the United Kingdom, and France, which should further improve its profitability.
In detail, the price of the basic offer (basic or essential) has increased, as has that of the Premium formula, while the versions with advertising and standard remain unchanged.
Netflix thus deliberately keeps the price of the offer with advertising low, which constitutes a flagship product for people who are not yet subscribed to the platform.
Over the three months from July to September, net profit was up 20%, to $1.6 billion. Turnover grew by nearly 8%, to $8.54 billion.
Favorably positioned, Netflix intends to accelerate further. If expenses related to content production are expected to be lower than expected in 2023, around $13 billion, due to the writers’ and actors’ strike, the group plans to put around $17 billion on the table next year.
“We are determined to end this strike” by actors, said Ted Sarandos, in a video posted Wednesday, regarding the actors’ work stoppage, which has lasted for more than three months. The writers, for their part, ratified an agreement with the studios at the beginning of October.
The manager estimated that the momentum of the negotiations in recent weeks had been cut by a new demand from the SAG-AFTRA union, which demands a percentage per subscriber, a clause deemed unacceptable by Netflix.
For Hargreaves Lansdown analyst Sophie Lund-Yates, the strike is “a cloud” in Netflix’s sky. “A lasting slowdown in production […] could be problematic, because they don’t have the Disney catalog to fall back on. »
After going through a period during which its competitors preferred to keep their content for their own platforms, Netflix nevertheless recently concluded new licensing agreements, notably with Warner Bros Discovery.
The partnership with the latter concerns, among others, the series “Band of Brothers” and “Six Feet Under”, initially produced and broadcast by the HBO channel.