Netflix said Thursday that it added 5 million subscribers in the most recent quarter, helping to lift revenue to $9.8 billion during the period, a 15% increase from the same period last year.
The company now has 282.7 million subscribers globally, far outpacing its competitors in streaming. Net income in the quarter rose to $2.3 billion.
Buoyed by new shows including “The Perfect Couple” and “Nobody Wants This,” as well as the existing shows “Emily in Paris” and “Cobra Kai,” and films like “Beverly Hills Cop: Axel F,” and “Rebel Ridge,” the company increased viewer engagement since last year at this time, averaging around two hours a day per paid membership.
“We are feeling really good about the business,” said Ted Sarandos, a co-CEO, at the start of Thursday’s earnings call.
Netflix executives say the company’s future growth will come largely from increasing subscriber engagement time by continuing to add shows and films that viewers want to watch. It also hopes to keep adding subscribers. The company said it commands 10% of the time people spend watching television, but it hopes to increase that number. The company plans to stop releasing quarterly information about total subscriber counts beginning next year but will unveil major subscriber milestones when it reaches them.
“Netflix shared more information about how much time users spend with it because ‘engagement’ is the new proxy metric to entice investors,” said Ross Benes, senior analyst with market research firm Emarketer.
Many analysts expected the company to raise the price of its standard subscription, which is $15.49 in the United States and hasn’t increased since November 2022. As of now, the company appears to be standing firm on its pricing structure in the United States, though it has raised prices in some other countries.
The number of people subscribing to Netflix’s ad tier grew 35% since last quarter, the company said, though that remains a small fraction of its overall subscription revenue. Its priority for 2025 is to improve its offering for advertisers, including building its own back-end system, it said. But Greg Peters, the company’s other co-CEO, said he does not expect advertising to be a primary driver of revenue next year.
Fourth-quarter programming highlights for the service are expected to be: the second season of its most popular show ever, “Squid Game”; a new season of “Love Is Blind”; a British spy drama starring Keira Knightley called “Black Doves”; and two comedy series — “No Good Deed,” starring Ray Romano and Lisa Kudrow, and “Man on the Inside” with Ted Danson. The company is also bullish on the international adaptation of Gabriel García Márquez’s novel “100 Years of Solitude,” and “Senna,” about the famous Brazilian Formula One driver.
The film slate appears to be more scant, a consequence, the company said, of the 2023 writers’ and actors’ strikes, along with a leadership change in the film group. Highlights for the coming quarter include: a thriller called “Carry On,” starring Jason Bateman and Taron Egerton; a Tyler Perry-directed war drama called “The Six Triple Eight,” starring Kerry Washington; and the animated film “Spellbound” from Skydance Animation, produced by John Lasseter.
And the company again shut down the perennial question of whether it would consider traditional theatrical releases for its films. Sarandos said that the company’s top 10 films generate 100 million views — equivalent, he said, with the rare films that gross billions at the box office.
“What we do for filmmakers is we bring them the biggest audiences in the world for their films, and then we help them make the best films of their life,” he said.
Sarandos also addressed a topic that had been furiously bandied about in Hollywood recently, a possible change to the company’s compensation structure for film and television creators. Netflix now pays them upfront for their work, rather than basing their payment on how a piece of content performs on the service. He reiterated the position articulated by his content chief, Bela Bajaria, last week: That approach is unlikely to change.
“We like our model, and talent likes our model,” he said. “It’s so much more impactful for our business if we can make our films, our shows, just a little bit better, so much more impactful than making them a little bit cheaper.”
He added that he would be open to changing the compensation structure if creators demanded it. So far, that doesn’t seem to be the case. Those types of deals rarely happen, he said, because “typically the talent chooses the upfront model. We think that we have the right model, and we are not looking to change it,” he said.
There is also great interest in Netflix’s live programming. The fourth quarter’s biggest engagement is likely to come from two live events: a pair of NFL football games on Christmas Day and the much-highlighted boxing match between Mike Tyson and Jake Paul, which is set for Nov. 15.
“We’re excited that we’re going to be capturing even more of the excitement that comes when the whole world gets together to watch something,” Sarandos said.
He expects the live cadence of events to continue into 2025 with weekly live WWE events and the addition of a talk show from comedian John Mulaney. While that won’t replace the 200 billion hours of recorded content the company streams annually, it will help create those zeitgeist moments that rarely happen in streaming.
“Thankfully,” Sarandos said, “all hours are not created equal.”
This article originally appeared in The New York Times.
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