Netflix lives! After two straight quarters of declines, the streamer Tuesday said it had added 2.4 million net subscribers between July and September. That’s more than double the 1 million additions the company had projected for the quarter and probably enough to at least temporarily put a hold on the “Netflix in Freefall” narrative that has become standard in much coverage of the platform. Yet it would be a mistake to say the boom times are back.
The 2.4 million net additions Netflix reported today are barely half the 4.4 million the streamer generated during the same quarter last year. And even with today’s better than expected tally, Netflix has grown by fewer than 2 million members for all of 2022 to date. The company projects that growth will pick up steam this fall, saying it expects to add 4.5 million subscribers over the next three months. But that would translate to a net addition of only about 6 million paid customers for the entire year. That’s just one-third of the 18.2 million members it added in 2021 — and barely 10 percent of the record 36 million who signed up in 2020 during the height of the pandemic. Netflix’s entire business model in its first decade in streaming was built around the promise of rapid growth and expectations of signing up 400 million or more members, so to have growth grind to a trickle while total membership is stuck around 225 million is … not ideal.
But it’s also not a disaster. The streamer remains by far the biggest player in the subscription video-on-demand business. And in recent weeks, Netflix leadership has been working overtime to convince investors that they’ve steadied their streaming ship after a stormy start to 2022. The company last week took the wraps off plans to launch a low-cost ad-supported tier in about a dozen countries, a bid to keep cost-sensitive customers from bailing on the service as well as a way to lure back those who canceled memberships following price hikes earlier this year. After years of insisting advertising had no place on Netflix, the streamer pivoted in record time, moving with a speed designed to demonstrate its ability to adapt to a changing marketplace.
What’s more, Netflix this week introduced a way for members who piggyback on someone else’s account to port their profile (and viewing history) over to a new account should they decide (or be forced) to get their own membership. That move was seen as laying the groundwork for a crackdown on password sharing. Netflix believes millions of people regularly watch its content but don’t pay for it — and don’t live in the same house (or even belong to the same family) as the person who does fork over the monthly fee. It has been testing ways to nudge these freeloaders into paying at least something for the ability to watch new episodes of Stranger Things and The Crown, and on Tuesday Netflix told shareholders those limited tests in smaller countries would go global. “We’ve landed on a thoughtful approach to monetize account sharing, and we’ll begin rolling this out more broadly starting in early 2023,” the company said in a letter to investors. “After listening to consumer feedback, we are going to offer the ability for borrowers to transfer their Netflix profile into their own account and for sharers to manage their devices more easily and to create sub-accounts (“extra member”) if they want to pay for family or friends.”