Netflix hails comeback quarter as Dahmer and Stranger Things stand out

Monster: The Jeffrey Dahmer Story

SVOD market leader Netflix has posted robust results for Q3 2022, beating analyst expectations and putting the horror show of Q2, 2022 in the rear view mirror. In a letter to shareholders, the company said: “Revenue, operating income and membership slightly exceeded our forecasts. We had big hits across TV and film in Q3 – launching some of our most watched series and films of all time, including: Monster: The Jeffrey Dahmer Story, Stranger Things S4, The Gray Man, and Purple Hearts.”

Netflix saw global subscriber figures reach 223m, up from 220.7m in Q2. It used its renewed momentum to take the fight to rivals, claiming Netflix has “higher engagement than any other streamer – with room for growth. Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard – we estimate they are all losing money, with combined 2022 operating losses well over $10bn, vs. Netflix’s $5-$6bn annual operating profit.”

Drilling down into the figures, Netflix said: “Our 6% year-over-year revenue growth in Q3 was driven by a 5% increase in average paid memberships and a 1% rise in ARM. In APAC, revenue grew 19% excluding F/X as average paid memberships rose 23% year-over-year. Excluding F/X, EMEA revenue and ARM grew 13% and 7%, respectively, while in LatAm, revenue increased 19% year-over-year.”

Looking ahead to Q4, Netflix said: “The appreciation of the US dollar remains a headwind for us. For Q4’22, we’re expecting revenue of $7.8 billion with the sequential decline entirely due to the strengthening of the US dollar vs. other currencies. Our revenue growth forecast is driven by our expectation for 4.5m paid net adds (vs. 8.3m in Q4’21). While we’re optimistic about our new ad business, we don’t expect a material contribution in Q4’22 as we’re launching Basic with Ads intra-quarter.”

On the subject of content, Netflix said: “In English scripted TV, we kicked off the quarter with Stranger Things S4, which generated 1.35 billion hours viewed – our biggest season of an English language series ever. This was followed in August by The Sandman (351 million hours viewed), which was loved by fans and critics alike. Near the end of the quarter, we launched season five of fan favourite Cobra Kai (270 million hours viewed) and limited series Monster: The Jeffrey Dahmer Story (824 million hours viewed) from Ryan Murphy, which is now our second largest English series.”

It added: “We continue to see great success with our non-English programming too, with Squid Game making awards history by becoming the first foreign language title to win an Emmy. Also from Korea, Extraordinary Attorney Woo, has reached #1 on our weekly non-English series list in 28 countries, notching up 402m hours viewed.”

Beyond TV and movies, the platform said: “We now have 35 games on service (all included in every Netflix subscription without in-game ads or in-app purchases) and we’re seeing signs of gameplay leading to higher retention. With 55 more games in development, including more games based on Netflix IP, we’re focused in the next few years on creating hit games that will take our game initiative to the next level. We see a big opportunity around content that crosses between TV or film and games.”