Following the news that Netflix added 2.4 million subscribers in the third quarter of 2022, causing shares to surge 14% in after-hours trading;

Francesca Gregory, Thematic Intelligence Analyst at GlobalData, a leading data and analytics company, offers her view:

“Netflix’s latest results break the narrative of a subscriber slump and market saturation, thanks in part to the popularity of hit series like Stranger Things, The Sandman, and Monster: The Jeffrey Dahmer Story. The company also reported room for revenue growth in its core markets. This is backed up by GlobalData forecasts, which estimate compound annual growth rates (CAGRs) of 7% in the US, 9% in the UK, and 7% in Canada for the subscription video on demand (SVoD) market between 2022 and 2026.

“However, beneath the carefully crafted optimism, a tough streaming winter lies ahead. Netflix has fiercely defended its binge-watching model, but this quarter’s subscriber numbers were buoyed by the release of Stranger Things in two parts (across Q2 and Q3), which fuelled suspense. As streamers feel the bite of a cost-of-living crisis, the platform can expect volatile churn rates as viewers pay for fewer subscriptions and switch when it suits them. Although the company’s ad-supported tier will go some way to help it retain subscribers, it may not be enough, as a shift towards non-premium content takes place.

“Despite its largely positive earnings, Netflix is still looking over its shoulder at its streaming war rivals. Amid the positivity of its earnings, the company also announced that it would not be sharing subscriber growth forecasts from Q1 2023. This is a bid to change the metrics of streaming success towards revenues while Disney and Amazon overspend to get subscribers in the door. Clearly, the platform is coming to terms with dwindling subscriber growth in its key markets and the rapid growth of its competitors.”