Netflix reported this week that it added 4.4 million subscribers during Q3-2021, more than doubling the number from the previous quarter, and far above the forecasted 3.50 million.

The No. 1 global streaming giant ended the quarter with 213.56 million subscribers.

The Q3 growth, which was up from 2.20 million global net subscriber additions in Q3-2020, helped to counter sluggish performances registered over the first half of 2021, as the explosive demand for streaming entertainment stimulated by the global pandemic began to subside.

Furthermore, signs point to the success continuing, as Netflix forecasts adding approximately 8.5 million new subscribers in the fourth quarter.

The subscriber boost was attributed in large part to the popularity of new programming during the period. Going forward, the service expects continued growth to come from new programs including the runaway hit streaming series from S. Korea — Squid Game, which launched in mid-September.

In a message to investors, the international streaming giant stated: “After a lighter-than-normal content slate in Q1 and Q2 due to Covid-related production delays in 2020, we are seeing the positive effects of a stronger slate in the second half of the year. In Q3, we grew revenue 16 per cent year over year to $7.5 billion (€6.45bn), while operating income rose 33 per cent vs the prior year quarter to $1.8 billion. We added 4.4 million paid net adds (vs 2.2 million in Q3 2020) to end the quarter with 214 million paid memberships. We’re very excited to finish the year with what we expect to be our strongest Q4 content offering yet, which shows up as bigger content expense and lower operating margins sequentially.”

The company also reported Q3 revenue growth of 16%, driven by 9% and 7% increases, respectively, in average paid streaming memberships.

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“We under-forecasted paid net adds for the quarter (4.4 million actual vs our 3.5 million projection), while ending paid memberships of 214 million was within 0.4 percent of our forecast. For the second consecutive quarter, the APAC region was our largest contributor to membership growth with 2.2 million paid net adds (half of total paid net adds) as we are continuing to improve our service in this region. In EMEA, paid net adds of 1.8 million improved sequentially vs the 188k in Q2 as several titles had a particularly strong impact. The UCAN and LATAM regions grew paid memberships more slowly. These regions have higher penetration of broadband homes although we believe we still have ample runway for growth as we continue to improve our service.”

Among the most successful programs in Q3-2021, Netflix said, were the fifth season of La Casa de Papel (aka Money Heist) and the third season of Sex Education, which recorded 69 million and 55 million member household views, respectively, in the first four weeks.

Another program showing promise for Q4-2021 is the limited series Maid, which was released October 1st and is expected to generate 67 million household views during the first four weeks.

Regarding Squid Game, which launched September 17th, Netflix said “it has become our biggest TV show ever,” with 142 million global member household views in its first four weeks. Netflix said the program is the No. 1 program in 94 countries including the United States.

As for Netflix film productions, the company said it continues to build a slate of titles including some successful Q3 hits including Sweet Girl starring Jason Momoa, which generated 68 million

member household views over the first four weeks. Other original movie hits included Kissing Booth 3, with 59 million member household views, the third installment Vivo with 46 million member views and Blood Red Sky, a German action horror movie with 53 million member household views.

In related news pointing to a streaming growth trend, Deloitte issued its Digital Media Trends Fall Pulse Survey, which indicated 84% of U.S. consumers are spending more time on online entertainment at home, compared to seeking out entertainment outside the home.

The study found that Baby Boom and Gen X audiences still rank “watching TV shows or movies at home” as their favorite entertainment activity, while Gen Z audiences rank ”playing video games” as a top preferred form of entertainment.‘

As for the staying power of the streaming growth trend, “churn & return” activity was shown to be most common with younger generations, as nearly half of millennials and 34% of Gen Z said they cancelled and then re-subscribed to the same streaming video service later the same year.

The top reason consumers cancelled an SVoD service was cost followed by finishing a show they signed up to watch. Some 65% of consumers said they watch free ad-supported video services.

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By Greg Tarr

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