After two straight quarters of subscriber losses, Netflix returned to growth in the third quarter of 2022 — and told investors it’s expecting a strong Q4 to finish the year along with the launch of its cheaper, ad-supported plans.
The streaming giant reported 2.41 million net new paid subscribers in Q3, to stand at 223.1 million worldwide as of the end of September. That handily topped Netflix’s previous forecast of a pickup of 1 million for the period.
For Q4, Netflix expects to gain 4.5 million new streaming customers, compared with 8.3 million in the year-earlier quarter. The current quarter promises to get some lift from Netflix Basic With Ads, slated to launch in the U.S. on Nov. 3 and priced at $6.99 per month — three dollars less than the regular Basic plan. Similar ad tiers are also coming next month to 11 other countries: Australia, Brazil, Canada, France, Germany, Italy, Japan, Mexico, South Korea, Spain and the U.K.
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Netflix didn’t say how many of the 4.5 million expected new subscribers will be on the ad-supported plan. “While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q4’22 as we’re launching our Basic With Ads plan intra-quarter and anticipate growing our membership in that plan gradually over time,” the company said in its Q3 letter to shareholders.
t’s not clear how many of the customers who sign up for Netflix’s ad plan will be existing subscribers shifting to the lower-cost package. However, COO Greg Peters has previously said the company believes revenue per subscriber on the ad-supported tier will be “neutral to positive.”
The results come after Netflix — for the first time in more than a decade — reported subscriber losses in the first half of 2022, dropping 200,000 in Q1 and 970,000 in Q2 (although the latter wasn’t as many as the 2 million the company forecast). Netflix has faced heightened competition in the sector, while rising inflation has pinched consumers’ wallets and household adoption of subscription streaming services has plateaued in the U.S. and other regions.
Meanwhile, Netflix continues its efforts to convert viewers who are illicitly borrowing passwords into paying customers. On Monday, it announced the global rollout of a profile-transfer feature to make it easier for a user on another customer’s account to create their own paid membership.
Pictured above: Elizabeth Debicki as Princess Diana in Netflix’s “The Crown” Season 5, premiering Nov. 9
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