After a rocky year of subscriber losses and investor doubt, Netflix is back with ambitions bigger than a season premiere of Stranger Things.
What happened: The streamer added 2.4 million subscribers last quarter—double what analysts expected—causing shares to surge 13.09% and competitors to weep (we assume).
- Netflix generated ~6% more revenue than the year before ($7.9 billion) thanks to binge-worthy hits like Stranger Things and Monster: The Jeffrey Dahmer Story.
- “Well, thank God we’re done with shrinking quarters,” co-CEO Reed Hastings said at the company’s earnings call (a sentence that’s begging to come back and bite him).
Why it matters: Netflix’s strategy of pumping out big hits seems to be working. Having the most must-watch content is a surefire way to get you, yes you, hooked and off rival services.
What’s next: To stave off those pesky “shrinking quarters,” Netflix is officially rolling out two money-making features:
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Netflix will be the first big streamer to kick off an ad tier on November 3, at the cost of $5.99 a month, and features 4-5 minutes of ads before and after shows.
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Charges for extra users will start showing up on your monthly bill in 2023, but you’ll be able to create “subaccounts” priced at ~$4-$5 per password mooch.
- The company is also seriously exploring cloud gaming, another potential audience generator, by opening a new gaming studio in California.
Yes, but: Netflix is not out of the woods just yet. Some critics are skeptical that the ad tier will drive growth and think it might just give current subscribers the option to pay less.
Bottom line: Last quarter’s earnings proved Netflix can still grow, but the company’s shares have still dropped ~54% on the year. Fully capturing its past glory might take a bit more work.