Netflix unveiled its third quarter financial results that ended on September 30, 2023, and it is nothing sort of remarkable. The streaming giant reported its best quarter with impressive growth in global revenue, net profit and paid subscriber base. Netflix’s global revenue in Q3 2023 soared 7.8% YoY and 4.3% QoQ, to reach an all-time high of $8.54 billion. The net profit also increased an impressive 20% YoY and 12.8% QoQ to $1.68 billion.
The most eye-catching statistic is Netflix’s burgeoning subscriber base. Let’s take a deeper look at it.
A Blockbuster Quarter
The number of Netflix subscribers reached an all-time high of 247.15 million in Q3 2023, with a 10.8% YoY and 3.7% QoQ growth. The company attracted 24.06 million paid subscribers in the last 12 months, and out of those, 8.76 million were onboarded in the last three months, ending September 30, 2023. The surge in new streaming subscribers for Netflix last quarter represents a significant milestone, surpassing even the excitement of Q2 2020 when a remarkable 10.1 million subscribers hopped aboard.
It’s worth highlighting that 2022 presented challenges for Netflix in terms of retaining existing ones and attracting new paid subscribers. The OTT platform experienced a loss of 1.172 million subscribers in H1 2022. However, since then, the OTT streaming giant has made a remarkable turnaround, consistently gaining new paid subscribers, and this growth trend has persisted since Q1 2023. In 2023, so far, Netflix has welcomed 16.406 million global paid subscribers to its platform.
Out of the total 8.76 million quarterly net additions to Netflix’s global paid memberships in Q3 2023, an impressive 3.95 million came from the EMEA region. This is followed by 1.88 million from the APAC region, 1.179 million from Latin America, and 1.75 million from the United States and Canada.
Intriguingly, after EMEA, the APAC region emerges as Netflix’s most rapidly growing market in terms of subscriber acquisition. During the last three months, ending September 30, 2023, this region welcomed an impressive 1.88 million new streaming members, elevating the total count to 42.43 million. APAC now proudly represents approximately 17.2% of Netflix’s overall paid subscriber base as of Q3 of 2023.
Netflix’s New Pricing Strategy
Netflix’s new subscription price adjustments mark yet another significant development in the streaming world. The global streaming powerhouse has announced price hikes for its subscribers in the US, UK, and France.
In the US, the price of Netflix’s Standard ads plan at $6.99, and the Standard ad-free plan at $15.49 will remain unchanged. However, the price of the Basic ad-free plan will go up from $9.99 to $11.99, and the Premium plan will increase from $19.99 to $22.99.
For subscribers in the United Kingdom and France, Netflix pricing for Ads/Basic/Standard/Premium are UK £4.99/£7.99/£10.99/£17.99 and 5.99€/10.99€/ 13.49€/19.99€, respectively. Notably, the pricing for the Ads and Standard plans in both the UK and France will remain unchanged, following the model of the United States.
The Quest for Advertising Dominance
Netflix, in its recent earnings release, has made it abundantly clear that its immediate focus is on fortifying its ad membership. The platform aims to position itself as an indispensable choice for advertisers, a pivotal step in making advertising a substantial part of its business strategy.
Interestingly, Netflix’s ads membership increased a whopping 70% QoQ in Q3 2023. It now constitutes approximately 30% of all new sign-ups across the 12 countries where ads are offered. This remarkable expansion can be attributed to significant enhancements in their offerings, including the introduction of two streams, improved video quality, and a programming slate that rivals Netflix’s other subscription plans in terms of content.
Another catalyst for Netflix’s ad membership growth has been the strategic phase-out of the Basic plan for new and returning members in the United States, the United Kingdom, Italy, and Canada. This shift has driven higher adoption rates for Netflix’s ads and Standard plans. Excitingly, the same change is set to be implemented in Germany, Spain, Japan, Mexico, Australia, and Brazil in the upcoming week, further propelling Netflix’s foray into the advertising world.
Netflix, Inc. (NASDAQ: NFLX) exceeded analysts’ earnings expectations, triggering a remarkable 12% surge in its shares after the market closed on Wednesday, October 18, 2023. This strategic decision to increase prices, coupled with a stricter stance on password sharing, underscores Netflix’s unwavering commitment to maximizing its profits. In a competitive landscape where content is king, Netflix’s ability to adapt and thrive remains a compelling story for business enthusiasts.
