Netflix announced that third quarter subscriber growth slowed more than expected, but forecast bigger increases in the fourth quarter to surpass the 200 million mark.
Third-quarter net income rose to $790 million, or $1.74 a share, from $665 million, or $1.47 a share a year ago.
Revenue rose to $6.436 billion from $5.245 billion a year ago.
Netflix said that at the end of the third quarter it has 195.15 million global paid subscribers, up 2.2 million from last quarter and up 23.3% from a year ago.
In the fourth quarter, Netflix expects to add 6 million customers, reaching 201.15 million subscribers.
The pandemic drove big increases in streaming during the first half of 2020.
“As we expected, growth has slowed with 2.2m paid net adds in Q3 vs. 6.8m in Q3’19,” the company said in its shareholder letter. “We think this is primarily due to our record first half results and the pull-forward effect we described in our April and July letters. In the first nine months of 2020, we added 28.1m paid memberships, which exceeds the 27.8m that we added for all of 2019. In these challenging times, we’re dedicated to serving our members.”
Despite Netflix’s guidance that it expected to add just 2,500 subscribers, the Wall Street consensus forecast the company increasing subscribers by 3.6 million.
The company added that retention of current subscribers remains “healthy and engagement per member household was up solidly year over year.”
While adding 6 million subscribers in the fourth quarter would be down from the 8.8 million the company added in the fourth quarter of 2019, it would push Netflix to a record 34 million paid net adds for 2020, topping the previous high of 28.6 million set in 2018.
Netflix said that the Asia-Pacific region was the largest contributor to paid subscriber growth during the quarter.
The company said that it is making progress in restarting production of its shows and it's shooting season 4 of Stranger Things and season 2 of The Witcher. It has also restarted production of the film Red Notice, starring Dwayne Johnson, Gal Gadot and Ryan Reynolds.
“For our 2021 slate, we continue to expect the number of Netflix originals launched on our service to be up year over year in each quarter of 2021 and we’re confident that we’ll have an exciting range of programming for our members, particularly relative to other entertainment service options,” the company said.
Netflix, which has been pretty secretive and selective with data about how many people watch its shows, said that 43 million subscriber households watched the new season of The Umbrella Society in the first 28 days episodes were available, and 38 million households watched Lucifer. In the first four weeks the series Ratched was watched by 48 million households.
During the quarter, Netflix said it released its two most watched documentary films ever, with American Murder: The Family Next Door projecting to have 52 million households watching in its first 28 days and The Social Dilemma getting 38 million.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.