Netflix Added 5M Subscribers in Q3 Despite Lingering Effects of Hollywood Strikes
The impacts of last year’s Hollywood strikes are still being felt at Netflix, according to the streaming giant’s co-CEO Ted Sarandos. “We’re moving closer and closer to a more normalized output schedule now—series a little more on track than film—but neither fully, fully recovered,” the executive told analysts today (Oct. 17) during Netflix’s third-quarter earnings call. Nevertheless, the streaming giant reported a 15 percent jump in revenue to $9.8 billion for the July-September quarter, beating Wall Street’s expectations, and added 5 million new subscribers during the quarter, bringing its total membership across pricing tiers to 282.8 million.
Quarterly net income came at $2.3 billion, up from last year’s $1.6 billion. The streaming giant expects its full-year revenue to grow by 15 percent, the high end of its previously issued guidance. The company said its viewership engagement increased to around two hours a day per paid membership. Netflix plans to stop disclosing quarterly subscriber features in 2025 and instead focus on reporting financial metrics.
Netflix hits like Emily in Paris, Cobra Kai and Outer Banks were originally scheduled for earlier in 2024 but have seen later release dates due to the 2023 actors’ and writers’ strikes, according to Sarandos, who described the company’s lineup during the first half of the year as “much lumpier than we’d like.” The streamer’s output became more regular in the third quarter and is on track to be “largely back to normal,” he said.
Netflix stays the course on compensation models and bundling stance
Reiterating similar comments made by Netflix’s content chief Bela Bajaria earlier this month, Sarandos told analysts Netflix has no plans to change its current compensation model. Paying talent upfront instead of based on the success of their content is a strategy that Netflix “pioneered,” he said, adding that the company is open to offering more bespoke deals for interested parties but that such arrangements rarely occur. “We like our talent model, and talent likes our model.”
Netflix is also staying steadfast on abstaining from streamer bundles, a technique that has become popular amongst its competitors. “I get that it’s a comfortable business model for legacy media companies and given the narrow scope of the libraries on these services and the fairly limited engagement, it makes sense for them,” said Sarandos. Instead, Netflix will focus on bolstering its package of series, films and games, said the executive, who noted the streamer’s emphasis on new content like unscripted shows, competition series and live events.
The Netflix head is, however, open to eventually embracing new technologies like A.I. Despite uncertainty surrounding how A.I. will impact media, Sarandos lauded the fact that “entertainment and technology have worked hand in hand throughout the history of time.” More experimentation will be needed before the tech can actually be put to use, he said. “Any tool that can enhance the quality, make [shows and films] better, is something that is going to actually help the industry a great deal.”