Fueled by subscriber growth in the Asia Pacific region, Netflix handily beat expectations in the third quarter. The streaming giant added 4.38 million streaming subs in Q3 2021, up 9.4% year-over-year, pushing its global total to 213.56 million. Netflix had forecast additions of 3.5 million streaming subs for Q3.
The APAC region, which added 2.18 million streaming subs in the period, was Netflix's largest contributor for a second consecutive quarter. Adds in the EMEA (Europe, Middle East and Africa) region improved to 1.8 million as growth in the US and Canada (+70,000) and Latin America (+330,000) slowed.
Netflix attributed its overall subscriber growth in the period to a stronger slate of content in Q3 that followed lighter-than-normal output in the first half of 2021 due to pandemic-related production delays. With another strong content slate set for the fourth quarter, Netflix noted in its investor letter (PDF) that it expects to tack on another 8.5 million streaming subs in Q4 2021 (similar to subscriber additions in Q4 2020), and end the year with a global base of 222.06 million.
On the financial end, Netflix generated Q3 revenues of $7.47 billion, up 16.3% year-over-year, and net income of $1.15 billion. The company expects Q4 revenues of $7.71 billion, up 16.1%, and net income of $365 million.
Netflix shares inched up in after-hours trading Tuesday, rising $1.85 (0.29%), to $640.85 each.
Shifting to hours viewed to track title engagement
Netflix reiterated that Squid Game, a series originating in South Korea, has become the streaming service's biggest TV show ever. Some 142 million subscriber households watched it in its first four weeks of release, the company said.
But that viewing metric, based on accounts that watched at least two minutes of an individual title, will soon be going away. Netflix announced that, starting later this year, it will shift to reporting on hours viewed for its titles rather than the number of accounts that choose to watch them.
"[W]e think engagement as measured by hours viewed is a slightly better indicator of the overall success of our titles and member satisfaction," Netflix explained, noting it intends to release title metrics on a more regular basis outside of its quarterly earnings. "It also matches how outside services measure TV viewing and gives proper credit to rewatching."
By way of example, some 82 million accounts watched Bridgerton: Season 1 in its first 28 days on Netflix. Under the future reporting metric, that translates to 625 million hours viewed, according to Netflix.
Netflix also offered a small update on a gaming test underway in select countries. Although this initiative is in its "very early days," Netflix noted that games offered on the service will be included in the base subscription and won't be saddled with ads or in-app purchases.
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— Jeff Baumgartner, Senior Editor, Light Reading