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Netflix Q3 Revenue Surges with Password Tracking and Ad-Supported Tiers

Netflix Grows Revenue

An increase in Netflix’s revenue has been seen for the third quarter as its password-sharing crackdown and ad-supported subscription tier, launched last year, has begun to accelerate. 8.76 million more subscribers in the third quarter than in the previous quarter has been reported as its password-sharing crackdown has become effective.    The online streaming OTT platform has posted a net income of $1.67 billion, showing an increase of nearly 20% from the prior-year quarter and representing earnings of $3.73 per share.The revenue has increased by 7.8%. 

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 Deeper Insights 

Netflix has quoted in its recent report: 

“In the past six months, our industry faced challenges due to strikes by writers and actors in the US. We’ve agreed with the WGA, but negotiations with SAG-AFTRA are ongoing. We’re committed to resolving these issues swiftly so everyone can return to creating beloved movies and TV shows.

Regarding ads, it’s been under a year since our launch. Building a new business from scratch takes time, and we’ve noted that ad revenue won’t significantly impact us in 2023. We’re very optimistic about the long-term potential in this $180 billion market, especially as more viewers shift from linear to streaming.

Our ad tier has strong member engagement, and while there’s work ahead, we’re making solid progress, laying the foundation for a multi-billion dollar revenue stream over time. Our immediate focus is growing our ad membership, making Netflix an essential choice for advertisers, a critical step for ads to become a significant part of our business.” 

Netflix is also innovating its ad formats to offer value to brands. They have initiated title sponsorships and plan to introduce a new ad product for binge-watchers next year. The company also invests in its sales team and technical infrastructure to augment its capabilities. 

The company announced this week a slew of new ad formats for marketers, including the ability for brands to sponsor its live events, like its new live golf match between Formula One drivers and PGA Tour players that it's calling "The Netflix Cup."

For years, Netflix said it wasn't interested in getting into live sports. However, the success of certain shows, like its "Formula 1: Drive to Survive" series, showed the opportunity in sports content to draw subscribers.

In a letter to shareholders, the company said it's "having great success" with what it called "sports shoulder programming," or programming about the drama of sport.

It has an exciting content lineup for the coming months, including its first live sporting event, The Netflix Cup, Squid Game reality show, and Scott Pilgrim anime. Additionally, it has secured a multi-year agreement with Skydance Animation for animated movies. 

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Key Takeaways 

  • 8.76 million more subscribers in the third quarter than in the previous quarter has been reported as its password-sharing crackdown has become effective.
  • Netflix posted a net income of $1.67 billion, showing an increase of nearly 20%, and representing earnings of $3.73 per share. The revenue has increased by 7.8%. 
  • Netflix has cited price rises as an opportunity for monetization growth

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