It’s official: Netflix is back. Well, more or less, anyway.
To say the world’s biggest streamer had a rough 12 months is an understatement. With the war in Ukraine, the cost-of-living crisis hitting businesses and consumers hard, and Netflix’s crackdown on account-sharing taking a toll on its subscriber base, things haven’t been rosy for the streaming corporation over the years. of 2022.
Netflix, however, seems to have finally turned the corner. In your Third quarter 2022 report (opens in new tab), Netflix revealed that it has added 2.42 million new subscribers to its global fan base – an increase of just 2.6% year-over-year for sure. But given that Netflix lost over a million fans between the first and second quarters of this year, its latest gains shouldn’t be overlooked.
The streamer’s recent originals have played a major role in this growth. Season 4 of Stranger Thing has been a major player in generating subscriber earnings, with the latest installment of the hit Netflix show racking up 1.35 billion hours viewed since Season 4, Part 1, released in late May. Other big hit TV series that helped grow Netflix subscribers include Monster: The Jeffrey Dahmer Story (824.15 million hours viewed), The Sandman (351 million hours viewed), Extraordinary Attorney Woo (402 million hours streamed) and Cobra Kai season 5 (270 million hours viewed).
On the Netflix movie side, movies like The Gray Man (270 million hours streamed), Purple Hearts (229 million hours watched) and The Sea Beast (156 million hours accumulated) also helped Netflix in its time of need. In short, Netflix’s Q2 2022 roster effectively saved the streaming service from a winter of discontent.
Thanks to its original programming and movie listings over the past three months, Netflix has also received a timely boost over its competitors. The streaming platform accounts for 7.6% of total TV time among US viewers – an audience share 1.4 times higher than its closest rival on Disney Plus. Meanwhile, Prime Video lags even further behind, with Netflix audiences sharing 2.6 times more than the Amazon streamer. And that’s despite the huge success that The Rings of Power, the big-budget, high-fantasy Prime Video series, has had on Amazon’s streaming service.
Netflix has also enjoyed a sustained period of growth in the UK compared to its rivals, with its 8.2% audience share blasting Prime Video (2.3x higher) and Disney Plus (2.7x higher) ). Suffice it to say that Netflix has a lot to celebrate.
However, for all its recent success, Netflix still finds itself adrift in troubled waters.
Despite its seemingly limitless cash reserves and position as the world’s biggest streamer, Netflix is lagging behind HBO Max in the movie-sharing department on the platform.
According to leading industry analysts Parrot Analytics, HBO Max holds an 18.7% share of movie audiences (in the US, at least) for all movies available on each platform. This includes streaming originals, licensed exclusives, and licensed non-exclusives. Compare that to Netflix’s 15.3%, and clearly the streamer’s boast of hit movies like The Gray Man – read our interview with directors The Russo Brothers about their development – seems a little over the top.
Netflix is also losing ground in the race for global demand when it comes to original programming. According to Parrot Analytics, Netflix currently holds a 40.9% market share – a number that far surpasses its rivals. However, Netflix’s audience share stood at 45.8% in Q3 2021, meaning it lost nearly 5% of its global demand for views over a 12-month period. Additionally, its 40.9% market share represents a slight drop from its 41.2% share in Q2 2022.
For all the good that Stranger Things 4 and company have done, Netflix isn’t fighting for control of its six main competitors. For the second quarter in a row, that sextet – Prime Video, Disney Plus, HBO Max, Apple TV Plus, Paramount Plus and Hulu – shared a higher share of global demand (42.8%) than Netflix.
Evidently, the biggest TV shows from these six streamers again affected Netflix’s market share. HBO’s House of the Dragon, Marvel and Star Wars’ Disney Plus offerings, and Amazon’s Lord of the Rings have all taken substantial bites out of Netflix. Again, things aren’t as good as Netflix might be doing.
And then there are Netflix revenue streams. The streaming company may have increased its subscriber base, but financially, it is yet to see a positive impact from a cash flow perspective. In Q3 2022, Netflix saw its revenue drop to $7.92 billion – down from $7.97 billion in Q2 2022 – which represents a 2.7% decrease in annual growth. Operating income and net income were also down slightly from Q2 2022 numbers.
Given Netflix’s downward trajectory from a monetary standpoint, it’s not surprising that it’s trying to turn its financial fortunes around. The streamer canceled several shows in development earlier this year, and while his attempts to crack down on password sharing may be less painful than initially expected, it’s not winning over fans. Additionally, Netflix’s introduction of an ad-based subscription tier may entice new users to sign up, but according to a survey, their current fanbase won’t have the option to pay less for their subscription if that’s the case. mean having to support ads every 15 minutes.
Speaking after the release of Netflix’s latest earnings report, Zuora CEO and Founder Tien Tzuo said: “It’s a new era of competition in streaming and the race is on to create the right offer, for the right subscriber, at the right time. Netflix-tier’s new announcement is a good start, but they still need to work on being more agile and dynamic, with packaging and packages, to keep competing with companies like Disney and HBO.”
Yes, on the surface, Netflix is changing its fortunes. Its recent release schedule has paid dividends, and in the longer term, the streamer should see a stabilization of the ship from a subscriber perspective.
Under the hood, however, things aren’t as universally positive as Netflix does. It still needs to be aware of the threat posed by its competitors, whose own slate of original programming continues to affect Netflix’s dominance in the streaming landscape. As long as Netflix does its job and doesn’t get complacent, it should keep the crown it has held for so long. If you don’t, however, subscribers can start going elsewhere for their streaming fix permanently.