Netflix’s knockout victory in the streaming war is confirmed. In the third quarter, the world number one in subscription video on demand (SVoD) once again saw its subscriber portfolio grow more than expected, widening the gap with competition that is increasingly kept at bay. From July to September 2024, the streamer won 5.1 million paying subscribers compared to the previous quarter, bringing the total to 282.7 million at the end of September. Analysts were counting on an increase of 3.87 million subscribers.
Netflix, Disney+, Max… The streaming giants on the verge of meeting the challenge of profitability
Everything is going well financially too. Turnover stood at $9.82 billion in the third quarter, up 15% year-on-year. Netflix slightly beats expectations: analysts projected $9.77 billion. Net profit reached $2.36 billion (+41%). Reported per share, which is the data most followed by investors, it is 5.40 dollars, while analysts expected 5.22 dollars. Its margin is also improving, to 30%, compared to 22% a year ago.
Logically, the stock market was fired up by these excellent results. The stock gained 3.88% Thursday evening in electronic trading after the close of the New York Stock Exchange. “ Some might find the stock’s rating to be a bit overblown given that revenue and subscriber numbers are only slightly above expectations, but in the current environment they are satisfactory », Reacted, in a note, Matt Britzman, of Hargreaves Lansdown.
Focus on income
Despite the pleasant surprise of exceeding analysts’ expectations, the trend is towards a decline in growth. In fact, the increase in the number of subscribers this quarter is the lowest recorded by the Los Gatos (California) group in six quarters. The year-over-year subscriber growth rate slowed to 14.4%, compared to 16.5% and 16% in the previous two quarters.
Nothing to panic investors, however. The market considers that with more than 282 million subscribers worldwide, Netflix is close to its ceiling, at least in its home market, the United States. The number of subscribers in the North America region, which includes the United States and Canada, also remained stable in the last quarter, at 84.8 million accounts.
From now on, it is therefore the retention of subscribers, and the increase in revenue, which has become the priority of Netflix and the market. This is why the streaming giant will stop communicating its number of subscribers in its quarterly results from 2025. Firstly because he anticipates stagnation, or weak growth. Then, because it prefers to prove to the market that it knows how to monetize its subscribers better than its competitors.
Instead, it will publish audience “engagement” figures, that is, time spent watching content. This is advantageous for Netflix, since the platform is the most consumed video service in the world every month, only behind YouTube but well ahead of all its competitors in the SVoD world.
Streaming: despite ever-increasing numbers, Netflix no longer wants to rely solely on its subscribers to stay ahead
Strawberry competition
The figures are indeed merciless for the competition. Netflix’s main rival, Disney+, only saw its portfolio grow by 1% between the first and second quarters of this year. At the end of June, the service claimed 118.2 million subscribers worldwide, or just over 40% of Netflix’s subscriber base (it has not yet published its third quarter results).
Even further, number 3 Max, the streaming service of the Warner Bros. group. Discovery, stood at 103.3 million subscribers at the end of June, but saw its number of subscribers decrease slightly in the second quarter. As for other players in the sector (notably Paramount+ and Peacock in the United States, Canal+ in France, etc.), they are still very far from approaching the symbolic milestone of 100 million users.
Only Amazon Prime Video, with its more than 200 million subscribers worldwide, could become a real threat to Netflix… if only that were the ambition of its parent company. But in reality, Prime Video is offered for subscribers to the Prime e-commerce offer, which gives an illusion of power. But the service absolutely does not compare with Netflix, Disney+, Max, Paramount+ and others, in terms of catalog, investment in content, and user experience.
Significant margins on advertising
Netflix also beats them all hands down in terms of revenue. Profitable for years, the firm led by Ted Sarandos and Greg Peters already has a substantial operating margin and intends to do so “ grow every year “, according to Spencer Neumann, Netflix’s chief financial officer. For comparison, its competitors are either still loss-making or barely profitable.
Thus, thead “ is not yet a significant growth driver, but it is expected to have a more significant contribution in 2025 “, he clarified. If the number of subscribers to the formula with advertisements, launched in 2022, jumped by 35% in a single quarter, analyst Ross Benes, from the firm Emarketer, estimates that revenues from advertisers still represent only 6% approximately of the turnover generated by subscriptions.
« We know the path and we are fully committed to trying to follow it as quickly as possible. “, described co-general manager Greg Peters about advertising, revealing that revenues from this source doubled every year.
Live games and sport, future gooses that lay golden eggs
To promote the retention of its subscribers, Netflix is also banking on the diversification of its offering. Thus, the streamer continues to develop and highlight its range of games, some of which are linked to the universe of its series, reality TV and films, including the next game Squid Games, taken from the South American phenomenon series. Korean.
The entertainment giant is also banking heavily on sport, with more and more live sporting events, to keep its subscribers loyal to the post. After the success of The Netflix Slam, which brought together Spanish tennis players Rafael Nadal and Carlos Alcaraz for a legendary exhibition, the platform will broadcast a live boxing match between stars Mike Tyson and Jake Paul on November 15. The company is also planning two American football games on Christmas Day. Of course, these live events will be interspersed with advertisements… which will both make their cost profitable and get subscribers used to accepting advertisements, as they do with traditional television.
