Netflix Subscribers Up 5.3 Million in Q3

Netflix has revealed its third-quarter results, with global streaming revenue rising by 33 percent to $2.9 billion and 5.3 million new members signing up for the SVOD service during the period, surpassing the forecasted amount.

Global streaming revenue in the quarter increased by 33 percent year-over-year, driven in part by a 24-percent rise in average paid memberships. Operating income nearly doubled to $209 million, with a Q3 global operating margin of 7 percent making the company likely to achieve its full-year goal.

Netflix added 5.3 million memberships globally (up 49 percent year-over-year) in Q3 as there continues to be a strong demand for the service’s original series and movies, as well as a growing adoption of internet entertainment worldwide. The company previously predicted 4.4 million additions for the quarter.

For Q4, Netflix forecasts global net adds of 6.3 million (1.25 million in the U.S. and 5.05 million internationally) versus 7.05 million in the year-ago quarter. The service recently rolled out price adjustments in many markets to its HD and 4K video plans, while the SD subscription remains mostly unchanged.

A statement from Netflix said: “We’ve been focused on growing global operating margin as our primary profitability metric since hitting our 2020 U.S. contribution margin goal of 40 percent this past Q1. This allows us to avoid near-term optimization for specific domestic or international contribution margin targets, which could impede our long-term growth. For instance, we anticipate our Q4’17 U.S. contribution margin will be 34.4 percent (a decline both year-on-year and sequentially) as we boost our marketing investment against a growing content slate. We spend disproportionately in the U.S. to generate media and influencer awareness for our programming, which we believe, in turn, is an effective way to facilitate word-of-mouth globally. In our international segment, we are on track to generate positive contribution profit for the full year. As we move into 2018, we aim to achieve steady improvement in international profitability and a growing operating margin as our success in many large markets helps fund investments throughout Asia and the rest of the world.”