Netflix had a turnaround quarter in Q3 2022, where it bucked the trend of subscriber losses in two successive quarters to emerge in the green. The streaming giant added 2.4 million subscribers in the September quarter, beating Wall Street estimates, and sending its stock soaring 14 per cent. The growth came on the back of “big hits across TV and film in Q3”, Netflix stated in its letter to shareholders. 

Netflix’s global subscriber base now stands at 223.1 million. Its strongest growth during the quarter came from the Asia-Pacific region (which includes India), where Netflix added 1.43 million subscribers. This is still lower than the 2.2 million it had added in Q3 2021, but higher than subscriber additions of the last two quarters. Netflix APAC revenues grew 19 per cent (excluding foreign exchange), with average paid memberships rising 23 per cent year-over-year, its filings showed. 

However, the ARM [Average Revenue Per Membership] dropped 3 per cent year-over-year, “partially driven by lower ARM in India, and somewhat offset by higher ARM in Australia and Korea”, the company explained. India, despite its growing streaming user base, shells out far lesser than developed markets when it comes to OTT spends. Netflix, in fact, has one of its cheapest plans in the country, starting at Rs 149 a month. 

Netflix said that building a subscriber-only business is hard. “Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard – we estimate they are all losing money, with combined 2022 operating losses well over $10 billion, vs. Netflix’s $5 to $6 billion annual operating profit,” it explained.

Despite low ARMs, viewership from India continued to grow. Netflix shared that Alia Bhatt-starrer original film Darlings was one of its most viewed (33 million hours) titles “on the non-English language film side”. “It launched to rave reviews and huge fandom in India,” Netflix stated in its shareholder letter. Danish psychological thriller Loving Adults (67 million hours viewed), and Korean blockbuster Carter (65 million hours viewed) were the other big non-English hits during the quarter. 

“Film is incredibly important to our members… We continue to complement our original films with third-party licensed films. They remain an important and valued part of our service, but they are just one component of our broader programming strategy,” Netflix added. 

Next quarter forecast

Q4 promises to be a bigger quarter, according to the streaming giant. Netflix hopes to add 4.5 million subscribers between October to December, and garner revenues of $7.8 billion (compared to Q3’s $7.93 billion). It attributes the sequential decline in revenues to the dollar’s appreciation over other currencies. “On a constant currency basis, this [Q4 guidance] equates to 9 per cent year-over-year revenue growth,” it stated. 

The streaming giant’s ad-supported plan launches in 12 countries in November, amidst its quest for new monetisation avenues. However, Netflix doesn’t think its full impact will play out in Q4 itself. 

“While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q4 ’22 as we’re launching our Basic with Ads plan intra-quarter and anticipate growing our membership in that plan gradually over time. Our is to give our prospective new members more choice – not switch members off their current plans,” it said. 

Also Read: Netflix reverses subscriber slump, shares surge 14%

Also ReadDarlings‘, ‘Laal Singh Chaddha‘, other top movie releases in August 2022 

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