Netflix Is Not Giving Up The Throne
The streaming giant posted its third-quarter results on Thursday, solidly beating earnings and showing it can continue attracting new subscribers. Besides a crowded streaming front, including no other than the entertainment giant The Walt Disney Company (NASDAQ: DIS) itself, Netflix (NASDAQ: NFLX) also needs to compete for users' attention with TikTok videos, videogames such as Epic Games-owned Fortnite as well as with old-fashioned books.
Quarter Figures
The quarter's subscriber growth of 4.4 million did a great job in topping the 3.84 million Wall Street expected and even its own estimate of 3.5 million as the company rolled out a bunch of content that was delayed due to the pandemic. The streaming pioneer now has a customer base of 222 million customers, out of which 67 million are in the United States.
For the quarter that ended on September 30th, Netflix generated $7.5 billion in revenue and ended with $1.4 billion in profit, slightly exceeding expectations.
Q4 Guidance- An Uncharted Territory
Netflix anticipates adding 8.5 million new customers in the undergoing quarter which is one of the biggest quarterly forecasts in its history. The co-CEO Reed Hastings elaborated that the amount of content for the fourth quarter is something it never had before so the only way through is by feeling with hopes to roll into a great next year as well. As for profitability, the guidance is $365 million on revenue of $7.7 billion.
A New Metric On the Horizon
Unlike traditional television, where economics is governed by ratings and cable licensing fees, Netflix doesn't make more money when viewers watch more hours but when more people sign up. For this reason, it announced it will use new metrics for reporting viewership to match how outside services measure TV viewing and give proper credit to rewatching.
It will report hours viewed rather than the number of accounts that watched. For example, the current measure ranks "Extraction," on top of the list with 99 million accounts have watched at least two minutes of the title in its first 28 days whereas the new measure would put "Bird Box" with 282 million total hours viewed within the same time frame. In addition, Netflix will also release title metrics more regularly in addition to quarterly earnings reports.
Squid Game Is a Game-Changer
The South Korean series was its biggest series launch ever, topping 111 million viewers globally and beating out "Bridgerton." Squid Game" will reportedly generate almost $900 million in impact value for the company. This success story shines a light on how much more affordable it is to make TV shows outside the United States with Disney having recently announced that 27 projects will be made in the Asia Pacific region.
Gaming Update
Netflix revealed its experiments with gaming are underway as it is testing its games in select countries. Games will be offered under Netflix subscriptions and will not include advertisements or in-app purchases.
The Offense
Netflix is also facing a rare public relations nightmare with Dave Chappelle's comedy special that critics saw as a hostile invective toward the transgender community rather than the boundary-pushing stand-up routine that Ted Sarandos, the company's co-chief executive, initially defended. However, he admitted to "screwing up" in his efforts to communicate with employees who were upset over "The Closer," in which Mr. Chappelle made remarks that some viewed as offensive to the transgender community. With the protest held on Wednesday to support the streamer's trans employees, who began a virtual walkout, it seems Netflix has still to figure out how to navigate such challenges.
What is clear is that Netflix is determined to defend its streaming throne by looking for new ways to keep customers glued to its service such as the upcoming gaming experiment.
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