Netflix subscribers grew by 8.76 million in the third quarter of 2023, totaling 247.15 million by the end of the fiscal period Sept. 30.
Per a letter to shareholders accompanying the Q3 results Wednesday, “Adoption of our ads plan continues to grow — with ads plan membership up almost 70% quarter-over-quarter — and 30% of sign ups in our ads countries are, on average, to our ads plan, with more work to do to scale this business.”
The streamer says its $6.99-per-month ad-supported plan “continues to support our ads plan growth” in the U.S. At the same time, Netflix on Wednesday increased the price of its basic and premium plans in the U.S., as well as in France and the U.K.
Netflix called out several originals that it says boosted subscriber growth in Q3, including the hit live-action adaptation of beloved Japanese manga “One Piece,” along with the mighty viewership power of USA Network drama “Suits,” which has been immensely popular on the platform throughout the summer.
In July, Netflix reported paid subscribers increased by 5.89 million in Q2, rising to 238.39 million global subscribers (up 8% year over year). Analysts had projected the streamer gaining 1.769 million new subscribers in the quarter ended June 30 — the period in which Netflix began notifying customers in the U.S. and other countries that users on their accounts who live outside their households would need to be added as an “extra member” (or pay for their own subscriptions).
Netflix stopped reporting projected subscriber growth in its quarterly financials at the start of 2023.
Throughout the third quarter, Netflix — along with the rest of Hollywood — saw the effects of the now-ended writers strike and still ongoing actors strike on its production operations. The company told investors it expects free cash flow for full-year 2023 to be approximately $6.5 billion, up from its prior forecast of at least $5 billion (and compared with $1.6 billion in 2022). That includes about $1 billion in lower-than-planned cash content spend in 2023 due to the WGA and SAG-AFTRA strikes.
Netflix co-CEO Ted Sarandos was among the top media execs who sat in on the final week of negotiations between the Writers Guild of America and Alliance of Motion Picture and Television Producers in an effort to reach an agreement, which was struck Sept. 24 after a 146-day work stoppage. Actors union SAG-AFTRA is still on strike and was unable to broker a deal with the AMPTP during their most recent negotiations last week.
“The last six months have been challenging for our industry given the combined writers and actors strikes in the US. While we have reached an agreement with the WGA, negotiations with SAG-AFTRA are ongoing,” Netflix wrote in its Q3 letter to shareholders. “We’re committed to resolving the remaining issues as quickly as possible so everyone can return to work making movies and TV shows that audiences will love.”
On the executive-pay front, after a shareholder backlash, Netflix said in the letter that it planned “substantial changes for 2024 to a more conventional model,” adding that it would continue to be based on “pay for performance.” In a symbolic rebuke, the majority of investors voted against the proposed exec pay packages for 2023 at the company’s June 1 annual shareholders meeting. In 2023, Sarandos’ pay package will be worth up to $40 million (matching his 2022 compensation plan) while co-CEO Greg Peters is set to receive as much as $34.65 million.
Wall Street forecast earnings per share of $3.49 on $8.54 billion in revenue, according to analyst consensus data provided by Refinitiv. Netflix reported adjusted EPS of $3.73 on $8.54 billion in revenue.
Netflix stock closed Wednesday at $345.91 per share. The regular U.S. stock markets will reopen Thursday at 9:30 a.m. ET.
Co-CEOs Sarandos and Peters and other Netflix executives will discuss the quarter in greater detail in a pre-recorded interview with a media analyst, which is set to go live on YouTube at 6 p.m. ET.
