>
It’s official: Netflix is back. Well, anyway.
To say that the world’s biggest streamer has had a rough 12 months is quite an understatement. With the war in Ukraine, the cost of living crisis hitting businesses and consumers hard, and Netflix’s crackdown on account sharing among its subscribers, things haven’t been rosy for the streaming company in 2022.
However, Netflix seems to have finally turned a corner. in his Q3 2022 report (opens in new tab), Netflix revealed it has added 2.42 million new subscribers to its worldwide fan base — just a 2.6% year-over-year increase, for sure. But with Netflix losing more than a million fans between Q1 and Q2 this year, the latest gains are not to be missed.
The streamer’s recent originals have played a big part in that growth. Stranger Thing Season 4 has been a major player in driving subscriber growth, with the latest installment in the hit Netflix show racking up an unparalleled 1.35 billion hours since Season 4 Part 1 launched in late May. Other major TV series that have helped push Netflix 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 watched).
On the Netflix movie side, The Gray Man (270 million hours streamed), Purple Hearts (229 million hours watched), and The Sea Beast (156 million accumulated hours) have also helped Netflix in its hour of need. In short, Netflix’s Q2 2022 slate has effectively saved the streaming service from a winter of discontent.
Thanks to the original programming and film slates of 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 — a viewership share 1.4 times greater than its closest rival in Disney Plus. Meanwhile, Prime Video is lagging even further, with Netflix’s market share 2.6 times that of Amazon’s 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 also experienced continued growth in the UK compared to its rivals, with an 8.2% viewership share shooting Prime Video (2.3 times larger) and Disney Plus (2.7 times larger) out of the water. Suffice it to say, Netflix has plenty to celebrate.
But for all its recent success, Netflix is still on murky water.
Despite its seemingly unlimited cash reserves and position as the world’s largest streamer, Netflix is lagging behind HBO Max when it comes to movie sharing on the platform.
According to leading industry analysts Parrot Analytics, HBO Max has an 18.7% share of movie audiences (at least in the US) for all movies available on every platform. That includes streaming originals, licensed exclusives, and licensed non-exclusives. Compare that to Netflix’s 15.3% and it’s clear that the streamer’s bragging rights about the success of films like The Gray Man – read our interview with directors The Russo Brothers on its development – seems a bit over the top.
Netflix is also losing ground in the race for global demand for original programming. According to Parrot Analytics, Netflix currently has a 40.9% market share – a figure that surpasses its rivals. However, Netflix’s viewership share was at 45.8% in the third quarter of 2021, meaning it has lost nearly 5% of its global viewer demand over a 12-month period. In addition, the 40.9% market share represents a slight decrease from the 41.2% share in the second quarter of 2022.
Despite all the good Stranger Things 4 and the company have done, Netflix isn’t struggling to regain control of its six main competitors. For the second straight quarter, that sextet — Prime Video, Disney Plus, HBO Max, Apple TV Plus, Paramount Plus, and Hulu — shared a global demand share (42.8%) higher than Netflix.
Apparently, the biggest TV shows on these six streamers have made another dent in Netflix’s market share. HBO’s House of the Dragon, Marvel’s and Star Wars’ Disney Plus offerings, and Amazon’s Lord of the Rings have taken substantial bites out of Netflix. Again, things aren’t as great as Netflix could make it out to be.
And then there are Netflix revenue streams. The streaming company may have increased its subscriber base, but financially it has yet to see a positive impact from a cash flow perspective. For Q3 2022, Netflix saw its revenue drop to $7.92 billion — down from $7.97 billion in Q2 2022 — representing a 2.7% drop in annual growth. Operating income and net income were also slightly lower than Q2 2022 figures.
Given Netflix’s downward trajectory from a monetary standpoint, it’s not surprising that it is trying to turn its financial fortunes around. The streamer canceled a number of in-development shows earlier this year, and while its attempts to crack password-sharing are less painful than initially anticipated, it’s not gaining fans. Additionally, Netflix’s introduction of an ad-based subscription tier may entice new users to sign up, but according to a TechRadar poll, the current fanbase won’t take the option of paying less for their subscription if it means enduring ads. . every 15 minutes.
After unveiling Netflix’s latest earnings report, Zuora CEO and founder Tien Tzuo said: “It’s a new era of competition in streaming and the race has begun to get the right offer, to the right subscriber, at the right time. Netflix’s new ad tier is a good start, but they still need to be more agile and dynamic, with packaging and bundling, to continue competing with companies like Disney and HBO.”
Yes, superficially, Netflix turns its fortunes around. The recent release schedule has paid off and in the long run, the streamer should see some stabilization of the ship from a subscriber’s perspective.
Under the hood, though, things aren’t as universally positive as Netflix would suggest. It must still be aware of the threat of its competitors, whose own slate of original programming continues to make a dent in Netflix’s dominance of the streaming landscape. As long as Netflix sticks to its job and doesn’t get complacent, it should keep the crown it holds for so long. However, if you don’t, subscribers could go elsewhere for their streaming solution permanently.