Netflix, a trailblazer in the streaming industry, displayed its resilience by attracting more quarterly subscribers than in the last three years, even in the midst of strikes by Hollywood’s writers and actors.
A smartphone displaying the Netflix logo is positioned on a keyboard, as depicted in this illustration captured on April 19, 2022.
This impressive performance caused a 13.5% surge in Netflix’s premarket trading shares on Thursday. Leveraging its substantial global production capabilities and the challenges faced by its media competitors, Netflix managed to amass 247 million subscribers in the third quarter, marking a substantial gain of nearly 9 million within the last three months.
This surge in subscribers marked the most significant increase since the outbreak of COVID-19 led to extraordinary growth in early 2020. As a result, Netflix’s shares climbed to $393.45, suggesting that the company was poised to increase its market capitalization by nearly $21 billion.
In response to this performance, analysts at Bernstein commended the company’s management for effectively managing investor expectations and noted that paid-sharing has uncovered a larger-than-anticipated market of potential Netflix subscribers.
Netflix shares surged as the results demonstrated resilience in the face of Hollywood strikes
The results of media competitors like Walt Disney, Paramount Global, and Warner Bros Discovery are expected to reveal the repercussions of the industry’s prolonged work stoppage, initiated by the strike of Hollywood’s writers in May. Although members of the Writers Guild of America reached a settlement this month, actors who went on strike in July are still not back to work. To navigate this challenging period, U.S. broadcast networks resorted to airing reruns and reality shows in their fall lineups.
Meanwhile, competing streaming platforms had to delay content releases and offered fewer foreign-language programs compared to Netflix, which has the advantage of producing content in over 50 countries and languages.
“Netflix is better positioned than many other entertainment companies to address programming gaps resulting from the strikes by writers and actors, thanks to its extensive international presence,” noted Ross Benes, Principal Analyst at Insider Intelligence. Given the delay in original U.S. productions and the fact that other TV and streaming platforms no longer have exclusive rights to popular titles, Netflix is expected to turn to licensing shows, much like it did in the past.
One noteworthy example of Netflix’s ability to adapt is the success of the live-action adaptation of the Japanese manga series “One Piece,” produced in collaboration between Netflix’s U.S. and Japanese content teams. It achieved the remarkable feat of becoming the top show in 84 countries, even outperforming the popular sci-fi series “Stranger Things.”
Additionally, older television shows like “Suits,” which last aired on the USA Network in 2019, found new viewers when they were added to Netflix’s library. These shows were licensed from media competitors, and Netflix’s extensive distribution footprint and recommendation system helped place them at the center of popular culture.
As the talks between the union for actors and performers and major studios stalled, Netflix Co-CEO Ted Sarandos recognized parallels between the current situation and how Netflix successfully navigated the “prolonged and unpredictable production interruptions” during the COVID-19 pandemic. He expressed confidence in Netflix’s rich and diverse content selection.
However, Netflix is not entirely immune to the disruptions caused by the strikes. Major U.S.-based shows like “Stranger Things” are on hold until the actors can return to work. This delay poses a challenge for Netflix since it lacks a comparable back catalog to fall back on, as is the case with Disney+.
Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles; Additional reporting by Chavi Mehta in Bengaluru; Editing by Gerry Doyle and Arun Koyyur
