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Netflix Subscriber Additions Likely Slowed, Growth Strategy in Focus

FILE PHOTO: The Netflix logo is shown on one of their Hollywood buildings in Los Angeles, California, US, July 12, 2023. REUTERS/Mike Blake/File Photo
FILE PHOTO: The Netflix logo is shown on one of their Hollywood buildings in Los Angeles, California, US, July 12, 2023. REUTERS/Mike Blake/File Photo
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Netflix Subscriber Additions Likely Slowed, Growth Strategy in Focus

FILE PHOTO: The Netflix logo is shown on one of their Hollywood buildings in Los Angeles, California, US, July 12, 2023. REUTERS/Mike Blake/File Photo
FILE PHOTO: The Netflix logo is shown on one of their Hollywood buildings in Los Angeles, California, US, July 12, 2023. REUTERS/Mike Blake/File Photo

Netflix could report its slowest subscriber additions in six quarters on Thursday as gains from a password-sharing crackdown ease, with investors looking for signs its nascent ad revenue business is accelerating.
The streaming giant likely added 4 million subscribers in the July-September period, according to analysts' estimates compiled by LSEG. Netflix originals such as "The Accident" and "The Perfect Couple" were among the top streamed titles in the US during the quarter, Nielsen data showed, according to Reuters.
As the pace of sign-ups slows, Netflix is trying to shift investor attention towards other performance measures including revenue growth and margins. It will stop reporting subscriber data from 2025.
"Their focus is to continue to grow subscribers at a healthy clip while also leveraging their scale, ability to raise prices and increase advertising dollars," said Pivotal Research analyst Jeff Wlodarczak.
The company's ad-supported plan has been growing but Netflix does not offer details on the tier's financial performance and does not expect it to become a primary driver of growth until 2026.
This has raised some concerns about its growth trajectory.
"They're making less than a billion dollars a year in the US on advertising, saying that doesn't make them look good," eMarketer television and streaming analyst Ross Benes said.
Some analysts have said the company needs to raise prices and phase out more of its ad free plans to nudge customers towards the tier with commercials as it usually brings in more revenue per user.
The company said in July last year it would stop offering the $9.99 a month basic plan without commercials to new users in the US and the UK, and phase it out for existing subscribers.
Netflix charges $6.99 per month in the US for the ad tier, while its standard plan without commercials is priced at $15.49 a month.
It has not raised the price of its standard plan since early 2022, while its ad-supported tier has been priced the same since its launch in late 2022.
The company, which operates in more than 190 countries, is expected to report ad revenue of $242.7 million in the third quarter, according to the average of estimates from three analysts compiled by LSEG. Overall revenue is expected to grow 14.3%, a slightly slower pace than the previous three months, to $9.76 billion.
To attract more advertisers, the streamer is focusing on live events including sports. Netflix will air the highly anticipated Jake Paul vs. Mike Tyson boxing fight in November, followed by its first NFL games in December.
The second season of hit South Korean drama series "Squid Game,” expected to release in December, could help the company draw subscribers in the last quarter of the year.
Netflix stock has risen 12.4% since it reported second-quarter results in July, compared with a 5% rise in the S&P 500 index.

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‘Terrifier 3’ Slashes ‘Joker’ to Take No. 1 at the Box Office, Trump Film ‘The Apprentice’ Fizzles

This image released by Cineverse Entertainment shows David Howard Thornton in a scene from "Terrifier 3." (Jesse Korman/Cineverse Entertainment via AP)
This image released by Cineverse Entertainment shows David Howard Thornton in a scene from "Terrifier 3." (Jesse Korman/Cineverse Entertainment via AP)
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‘Terrifier 3’ Slashes ‘Joker’ to Take No. 1 at the Box Office, Trump Film ‘The Apprentice’ Fizzles

This image released by Cineverse Entertainment shows David Howard Thornton in a scene from "Terrifier 3." (Jesse Korman/Cineverse Entertainment via AP)
This image released by Cineverse Entertainment shows David Howard Thornton in a scene from "Terrifier 3." (Jesse Korman/Cineverse Entertainment via AP)

The choices on the movie marquee this weekend included Joaquin Phoenix as the Joker, a film about Donald Trump, a “Saturday Night Live” origin story and even Pharrell Williams as a Lego. In the end, all were trounced by an ax-wielding clown.

“Terrifier 3,” a gory, low-budget slasher from the small distributor Cineverse, topped the weekend box office with $18.3 million, according to estimates Sunday. The film, a sequel to 2022’s “Terrifier 2” ($15 million worldwide in ticket sales), brings back the murderous Art the Clown (David Howard Thornton) and lets him loose, under the guise of Santa, at a Christmas party.

That “Terrifier 3” could notably overperform expectations and leapfrog both major studios and awards hopefuls was only possible due to the disaster of “Joker: Folie à Deux.” After Todd Phillips’ “Joker” sequel, starring Phoenix and Lady Gaga, got off to a much-diminished start last weekend (and a “D” CinemaScore from audiences), the Warner Bros. release fell a staggering 81% in its second weekend, bringing in just $7.1 million.

For a superhero film, such a drop has little precedent. Disappointments like “The Marvels,” “The Flash” and “Shazam Fury of the Gods” all managed better second weekends. Such a mass rejection by audiences and critics is particularly unusual for a follow-up to a massive hit like 2019’s “Joker.” That film, also from Phillips and Phoenix, grossed more than $1 billion worldwide against a $60 million budget.

The sequel was pricier, costing about $200 million to make. That means “Joker: Folie à Deux” is headed for certain box-office disaster. Globally, it’s collected $165.3 million in ticket sales.

“This is an outlier of a weekend if ever there was one,” said Paul Dergarabedian, senior media analyst for Comscore. “If you had asked anyone a month ago or even a week ago: Would ‘Terrifier 3’ be the number one movie amongst all these major-studio films and awards contenders? To have a movie like this come along just shows you that the audience is the ultimate arbiter of what wins at the box office.”

The “Joker” slide allowed “The Wild Robot,” the acclaimed Universal Pictures and DreamWorks animated movie, to take second place in its third weekend with $13.4 million. Strong reviews for Chris Sanders’ adaptation of Peter Brown’s book have led the movie, with Lupita Nyong’o voicing the robot protagonist, to $83.7 million domestically and $148 million worldwide.

The young Donald Trump film “The Apprentice,” distributed by Briarcliff Entertainment in 1,740 theaters, opened in a distant 10th place, managing a paltry $1.6 million in ticket sales. While expectations weren’t much higher, audiences still showed little enthusiasm for an election-year origin story of the Republican nominee.

If headlines translated to ticket sales, Ali Abbasi’s film might have done better. “The Apprentice,” starring Sebastian Stan as Trump under the mentorship of Roy Cohn (Jeremy Strong), has been making news since its debut at the Cannes Film Festival, up to its last-minute release just weeks before the election. The Trump campaign has called the movie “election interference by Hollywood elites.”

Abbasi’s film, set in the 1970s and 1980s, tested moviegoer’s appetite for a political film in an election year. Major studios and specialty labels passed on acquiring it in part because of the question of whether a movie about Trump would turn off both liberal and conservative moviegoers, alike. “The Apprentice” will depend on continued awards conversation for Strong and Stan to make a significant mark in theaters before voters turn out at the polls.

Jason Reitman’s “Saturday Night” failed to ignite its nationwide expansion. The film, with an ensemble cast led by Gabriel LaBelle’s Lorne Michaels, collected $3.4 million from 2,288 locations. The Sony Pictures release, about the backstage drama as the NBC sketch comedy show is about to air for the first time in 1975, will likely need to make more of an impact with audiences to carry it through awards season.

“Piece by Piece,” a Pharrell Williams documentary-biopic hybrid animated in Lego form, had also been hoping to click better with moviegoers. The acclaimed Focus Features release, directed by veteran documentarian Morgan Neville (“20 Feet From Stardom,” “Won’t You Be My Neighbor?”), opened with $3.8 million from 1,865 theaters.

But the debut for “Piece By Piece,” while low for a Lego animated movie, was very high for a documentary. “Piece By Piece,” which had the weekend’s best CinemaScore, an “A” from audiences, could play well for weeks to come. The film, which was modestly budgeted at $16 million, is also likely to end up the year’s highest grossing doc — if “Piece By Piece” can be called that.

“We Live in Time,” the weepy drama starring Florence Pugh and Andrew Garfield, had one of the year’s best per-theater averages in its five-screen opening. The A24 release, which will expand nationwide next weekend, debuted with $255,911 and a $51,000 per-screen average.

Outside of the success of Warner Bros.’ “Beetlejuice Beetlejuice” (which pulled in $7.1 million in its six weekends of release despite recently launching on video-on-demand), Hollywood’s fall has struggled to get going. Low-budget horror, like “Terrifier 3,” continues to be one good bet in theaters, but this autumn has been mostly characterized by bombs like “Joker: Folie à Deux” and “Megalopolis.”

This time last year, Taylor Swift was giving the box office a massive lift with “The Eras Tour.” This weekend compared with the same time last year was down 45% according to Comscore.