Netflix beat its own subscriber growth estimates and the Wall Street consensus during a third quarter bolstered a stronger slate of content less impacted by COVID-19-related production delays.
The company added approximately 4.4 million new paid streaming memberships—driven almost entirely by growth in Asia, Europe and Middle East markets—and beat its forecast of 3.5 million and analysts’ expectations of 3.7 million. Subscriber growth in the U.S., Canada and Latin America was much slower, which Netflix attributed to higher penetration of broadband homes, though it believes it still has “ample runway for growth” in those markets.
Netflix ended the quarter with approximately 213.5 million paid subscribers and it’s forecasting another 8.5 million additions for the fourth quarter.
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Netflix grew its quarterly revenue by 16% year over year to about $7.5 billion and grew its quarterly operating income by 33% to about $1.8 billion. The company said the uptick was driven by a 9% and 7% increase in average paid streaming memberships and average revenue per membership.
Later in the year, Netflix said it will shift its engagement and viewership metrics to hours viewed for specific titles rather than the number of accounts that watched. In an example of current and future reporting, “Bridgerton” season one tops charts for both accounts viewed (82 million) and hours watched (625 million). However, whereas “Lupin” and “The Witcher” are tied for number two on the list for accounted viewed (76 million each), neither series appears in the top ten for hours watched.
“There is some difference in rankings…but we think engagement as measured by hours viewed is a slightly better indicator of the overall success of our titles and member satisfaction. It also matches how outside services measure TV viewing and gives proper credit to rewatching. In addition, we will start to release title metrics more regularly outside of our earnings report so our members and the industry can better measure success in the streaming world,” the company wrote in a letter to shareholders.