Netflix Q3 Ad Option Soars 70%, Accounts For Nearly A Third Of Sign-Ups

Netflix saw higher-than-expected third-quarter net paid global memberships -- up 8.8 million versus the second quarter, which boosted revenues higher than projections to $8.5 billion.

A year ago, Netflix tallied 3.2 million net additions in the third quarter of 2022.

The company says a number of factors were at work here, “including a higher percentage of membership growth from lower ARM countries, limited price increases over the past 18 months, and some shift in plan mix.”

Net income was $1.7 billion -- up from $1.4 billion a year ago. Netflix now has 247.15 million global subscribers.

With regard to its highly watched “Basic With Ads” advertising option, it says in its shareholder letter: “Our immediate priority is building our ad membership so that Netflix becomes an essential buy for advertisers, which is key for advertising to become material to our business. In third quarter 2023, our ad membership increased nearly 70% quarter-over-quarter and now accounts for around 30% of all new sign-ups in our 12 ads countries.” Financial and subscriber details were not provided.



Global ad-option subscribers are projected to reach around 10 million, with 5 million coming from the U.S.

As expected, Netflix said it is raising prices -- in the U.S., the U.K. and France. 

But for the U.S., not all products will have price hikes. In the U.S. ‘Basic With Ads’ ($6.99/month) and ‘Standard’ plans ($15.49/month) will remain the same, while Basic (with no-ads for existing subscribers) will now be $11.99 (vs. $9.99/month) and Premium $22.99 (vs. $19.99/month). 

Netflix ended its Basic with no-ads plan in July of this year for new subscribers.

Netflix says its lowest-priced option -- Basic With Ads -- “is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket.”

In the North American market -- U.S./Canada -- net paid subscriber additions rose 1.75 million -- up from 1.17 million additions in the second quarter, and from 10,000 adds in the weak third-quarter 2022 period. Total U.S. subscribers are 77.3 million.

Its average revenue per membership in the U.S. is $16.29, compared to $16.00 in the second quarter.

Versus the third quarter, Netflix projects even better top-line results in the fourth quarter of 2023 -- a 11% improvement to $8.7 billion in revenue.

But net income is estimated to shrink to $956 million ($1.3 billion in fourth quarter of 2022). It expects similar net subscriber growth to that of this current reporting period.

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