Netflix is great at making money – its problem is keeping viewers hooked
An ‘engagement problem’ plagues the streaming giant, even as its revenue grows
Netflix, the world's largest paid streaming service with 325 million subscribers, has shown robust financial growth, but faces an engagement problem that continues to worry investors and shareholders. In the third quarter, revenue grew 12% from the previous year to nearly $12.9 billion, even as quarterly revenue growth slowed to the lowest in three years.
Net income increased 44% to $3.7 billion for the year, with a projected 13% revenue growth for the whole year. Despite this financial success, Netflix's stock saw a 6% drop after-hours, having fallen over 40% in the past year. Concerns over stagnating attention time, particularly in the US and Canada, led to recent turmoil after the company laid off 1,000 employees, fired its chief content officer, and two top film executives.
Ted Sarandos, co-CEO of Netflix, acknowledged the issue but stated that a fundamental shift in strategy is unnecessary, emphasizing the need for better execution in the US. The company's recent focus on expanding through third-party licensing and cutting high-profile executives, such as Bela Bajaria and Dan Lin, indicates a reset of its programming strategy.
However, Wall Street analysts question how Netflix will kick-start growth, with Ted Sarandos promising to focus on quality TV shows and movies to make the platform a must-have service. Despite the challenges, Netflix maintains a loyal following, with the lowest churn rate of any streaming service, according to a report by Antenna.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
