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Netflix earnings up but US subs struggle

Netflix’s The Crown is one of the most expensive dramas ever made

Global streamer Netflix’s third-quarter financial results show soaring global revenues but its US subscription figures continue to disappoint.

Earlier this year, the SVoD giant’s quarterly results wiped 9% off its share price after revealing its first dip in US subscribers in eight years and missed global earnings targets.

That meant this week’s results were always going to be watched closely by the content business, and although the figures present a mixed picture, Netflix shares climbed more than 10% in Wednesday trading after their release.

In the US, Netflix added 517,000 paid subscribers against an expectation of 802,000. Internationally, 6.26 million new users signed up, well above predicted levels of closer to six million.

Revenues were at US$5.24bn, broadly in line with projections and up more than 30% year on year, with earnings per share at US$1.47.

For the fourth quarter, Netflix expects to report earnings of 51 cents per share on revenue of $5.4bn. The company said it expected to add 7.6 million global subscribers compared with 8.8 million in the same period last year.

The streamer is facing increasing competition, with WarnerMedia’s HBO Max, NBCUniversal’s Peacock, Apple TV+ and Disney+ all set to enter the streaming market in the coming months.

This has led to a content arms race that recently saw Netflix pay a reported US$500m for the back catalogue of Seinfeld, having previously seen popular sitcom Friends return to WarnerMedia.

Some industry experts have questioned the value and wisdom of such deals, while C21 exclusively revealed earlier this week that one of Netflix’s biggest and most expensive dramas, The Crown, will only remain with it exclusively for a few more months, with Sony Pictures Entertainment preparing to sell the show into the linear market.

In its note to shareholders this week, Netflix said: “Many are focused on the streaming wars, but we’ve been competing with streamers 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.

“While the new competitors have some great titles (especially catalogue titles), none have the variety, diversity and quality of new original programming that we are producing around the world.”


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