Netflix got back on track with regards to its subscribers in the United States during the third quarter as it saw a gain in members just as Disney and Apple are set to launch their own high-profile streaming TV services.
After U.S. stock markets closed Wednesday, Los Gatos-based Netflix said it added 6.77 million paid members in quarter that ended in September. Of its new subscribers, Netflix added 517,000 members in the U.S., which remains the company’s single-largest subscriber region. The company ended the quarter with a total of 158.3 million subscribers worldwide.
Netflix actually missed expectations for its subscriber growth, as the company had earlier forecast a gain of 7 million new subscribers in the quarter, and 800,000 new paid members in the U.S. But the fact that Netflix was back to adding subscribers was enough to encourage many investors, as Netflix’s shares rose almost 10%, to $314.07 in after-hours trading on Wednesday.
Along with its subscriber figures, Netflix also reported a profit of $1.47 a share, on $5.25 billion in revenue.
Still, some analysts that cover Netflix said the company will have its work cut out for it in the coming months as Apple launches its Apple TV+ streaming service on Nov. 1, and Disney brings its massive content library to the streaming TV front when its Disney+ service goes live on Nov. 12.
Those two new entrants are also looking to undercut Netflix on price, as Apple TV+ will cost $4.99 a month and Disney is charging $6.99 a month for Disney+. Netflix’s plans start at $8.99 a month, and its most-popular streaming TV option costs $12.99 a month.
“The jury is still out for Netflix,” said Haris Anwar, an analyst with Investing.com “The company has managed to reverse the slide in growth for its subscribers, but at the same time, it’s not promising much for the next quarter.”
With the streaming TV field getting more crowded, Netflix said it expects to add 7.6 million paid subscribers during the fourth quarter of this year, with 600,000 of those in the U.S.
The company also said that beginning in January, it will change how it reports and forecasts memberships. Netflix said that in addition to reporting total subscriber membership and revenue figures, it will break down such numbers for the regions of Asia Pacific, Europe, the Middle East & Africa, Latin America and the U.S. and Canada. Netflix will also only give worldwide new-subscriber estimates.
In a letter to shareholders, Netflix admitted that new streaming rivals like Disney+, Apple TV+ and the upcoming HBO Max are providing it with “increased competition,” but also remained defiant about how it can stand up to its rivals.
“While the new competitors have some great titles, especially catalog titles, none have the variety, diversity and quality of new original programming that we are producing around the world,” Netflix said.
Michael Pachter, a Wedbush Securities analyst who covers Netflix, remained skeptical about the the company’s ability to grow against increasing competition, while also having higher prices than many of its rivals.
“While I think the launches of competitive services will ultimately impact them, I actually think the wimpy domestic guidance is more of a reflection that they are priced too high for a lot of people,” Pachter said. “And new services at lower prices limits their ability to raise prices further.”
