People/Biz

Netflix beats Q3 revenue expectations, adds 6.8 million subscribers

Netflix revenue surged to US$5.2 billion in the third quarter of 2019, exceeding expectations and bolstering the streamer’s fiscal standing after a shaky second quarter. The company posted a 31% increase in ...
October 17, 2019

Netflix revenue surged to US$5.2 billion in the third quarter of 2019, exceeding expectations and bolstering the streamer’s fiscal standing after a shaky second quarter.

The company posted a 31% increase in revenue over the year prior in a letter to shareholders Oct. 16.

It added 6.8 million subscribers –  an all-time Q3 record — falling short of its projected 7 million but soaring well above Q2′s 2.7 million additions and the prior year’s 6.1 million.

In the U.S., subscriber additions topped out at just half a million in Q3, shy of its anticipated 0.8 million, which the global streaming giant attributed to the price increases introduced earlier this year.

“Retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower U.S. membership growth,” the letter stated. “On a member base of more than 60m, very small movements in churn can have a meaningful impact on paid net adds.”

International paid net additions climbed 23% to 6.3 million in Q3, compared to 5.1 million in the year ago quarter and slightly above Netflix’s anticipated 6.2 million. Year to date paid net adds total 2.1 million, compared to 4.1 million in the first nine months of 2018.

“We’re making strides in our key markets and, while we have much more work to do in Asia in the coming years, we are seeing encouraging signs of progress,” the company stated.

Netflix forecasts it will add 7.6 million subscribers in the fourth quarter, which would bring its total number of subscribers to 166 million.

“While we had previously expected 2019 paid net adds to be up year over year, our current forecast reflects several factors including less precision in our ability to forecast the impact of our Q4 content slate, which consists of several new big IP launches (as opposed to returning seasons), the minor elevated churn in response to some price changes, and new forthcoming competition,” the letter stated.

The streamer expects its revenue to continue climbing, projecting a jump to $5.4 billion for the fourth quarter of 2019.

In the letter to shareholders, Netflix said its plans to continue to focus on original content, largely due to the anticipated pullback of second run content from some studios and because original content “is working in the form of member viewing and engagement.”

It also plans to expand its investment in local language original films and unscripted series.

“Many are focused on the ‘streaming wars,’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade. The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV,” the company stated. “The launch of these new services will be noisy. There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance. In the long-term, though, we expect we’ll continue to grow nicely given the strength of our service and the large market opportunity.”

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About The Author
Jillian Morgan is a staff writer at realscreen with a background in journalism and digital marketing. She joined the publication in 2019 after serving as the assistant editor to trade publications HPAC and On-Site. With a bachelor of journalism from the University of King's College in Halifax, she also works as a freelance writer and fact-checker.

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