It’s official: Netflix is back. Anyway, kind of.
To say that the biggest streamer in the world has had a difficult 12 months is a bit too little. With the war in Ukraine, the cost of maintaining the crisis hitting companies and consumers hard, and Netflix’s repression of account sharing is encroaching on the subscriber base, things weren’t rosy for a streaming corporation in 2022.
However, it seems Netflix has finally turned a corner. In his Report for the third quarter of 2022 (opens in a new tab)Netflix has revealed it has added 2.42 million new subscribers to its global fan base – surely only 2.6% more than year on year. But with Netflix losing over a million fans between the first and second quarters of this year, its latest gains are not to be missed.
The latest streamer originals played a big role in this development. Season 4 of Stranger Thing has been a major player in increasing subscriber base, and the latest installment of the popular Netflix show has amassed an unmatched 1.35 billion hours watched since the first season four, which launched at the end of May. Other popular TV series that have helped Netflix subscribers include Monster: The Jeffrey Dahmer Story (824.15 million watch hours), The Sandman (351 million watch hours), Extraordinary Attorney Woo (402 million watch hours), and Cobra Kai season 5 ( 270 million hours watched).
When it comes to Netflix movies, the likes of The Gray Man (270 million hours of streaming), Purple Hearts (229 million hours of watching), and The Sea Beast (accumulated 156 million hours) have also helped Netflix in need. In short, Netflix’s plan for Q2 2022 successfully saved the streaming service from a winter of discontent.
With original shows and movie sets, Netflix has also gained a competitive advantage in the last three months. The streaming platform provides 7.6% of the total TV viewing time for American viewers – audience share is 1.4 times greater than its closest rival at Disney Plus. Meanwhile, Prime Video lags even further behind, and Netflix viewers have a 2.6 times greater share than the Amazon streamer. And this despite the tremendous success The Rings of Power, high-definition, high-budget Prime Video series has had on Amazon’s streaming service.
Netflix also enjoyed a sustained period of growth in the UK compared to its rivals, with an 8.2% audience share that kicked Prime Video (2.3 times as much) and Disney Plus (2.7 times as much) out of the water. Suffice it to say that Netflix has something to celebrate.
However, despite all its recent success, Netflix is still drifting in choppy waters.
Despite its seemingly unlimited cash reserves and positioning as the world’s largest streamer, Netflix lags behind HBO Max in the platform’s video sharing department.
According to leading industry analysts, Parrot Analytics, HBO Max has an 18.7% share of the viewership of movies (in the US, anyway) all videos available on each platform. This includes streaming of originals, licensed exclusives, and non-exclusive licensed. Compare that to Netflix’s 15.3%, and the streamer’s clear bragging of the success of movies like The Gray Man – read our interview with directors The Russo Brothers about its development – seems a bit over the top.
Netflix is also losing out in the race for global demand when it comes to original shows. According to Parrot Analytics, Netflix currently has a market share of 40.9% – a figure ahead of its competitors. However, Netflix’s audience share was 45.8% in the third quarter of 2021, which means it lost almost 5% of global viewership demand within 12 months. Additionally, the 40.9% market share means a slight decrease compared to the 41.2% share in the second quarter of 2022.
For all the good Stranger Things 4 and the company have done, Netflix isn’t taking away control of its six major competitors. For the second consecutive quarter, the sextet – Prime Video, Disney Plus, HBO Max, Apple TV Plus, Paramount Plus and Hulu – split global demand (42.8%) higher than Netflix.
Apparently, the biggest TV shows on these six streamers reduced Netflix’s market share again. HBO House of the Dragon, Marvel’s and Star Wars’s Disney Plus and Amazon’s Lord of the Rings bit off Netflix. Again, things aren’t as great as they may seem.
And then there are Netflix revenue streams. The streaming company may have increased its subscriber base but financially has yet to see a positive impact from a cash flow perspective. Netflix’s revenue fell to $ 7.92 billion in the third quarter of 2022 – compared to $ 7.97 billion in the second quarter of 2022 – representing a 2.7% decline in annual growth. Operating profit and net profit also slightly decreased compared to the results for the second quarter of 2022.
Given Netflix’s downward trend from a monetary point of view, it’s no surprise that it is trying to turn its financial fortunes around. Earlier this year, the streamer canceled several shows in development, and while his attempts to crack down on password sharing may be less painful than initially expected, he doesn’t convince fans. In addition, Netflix’s introduction of an ad-based subscription tier may entice new users to sign up, but according to a TechRadar poll, its current fan base will not benefit from paying less for a subscription if that means having to lift ads every 15 minutes.
Speaking after the release of the latest Netflix earnings report, Zuora CEO and founder Tien Tzuo said: “A new era of streaming competition is coming and the race is underway to create the right deal for the right subscriber at the right time. The new Netflix-tier ad is a good start, but they still need to work on being more agile and dynamic, with packaging and bonding, to continue to compete with the likes of Disney and HBO. ”
Yes, apparently Netflix turns the tide. His recent release schedule has paid dividends and, in the long run, the streamer should see the ship stabilize from a subscriber’s perspective.
Under the hood, however, things aren’t as universal as Netflix claims. He still needs to be aware of the threat posed by its competitors, whose own original listings still influence Netflix’s dominance in the streaming landscape. As long as Netflix is doing its job and not complacent, it should keep the crown it has been holding for so long. However, if you don’t, subscribers may start wandering elsewhere to fix the streaming permanently.