- Netflix added over 5 million subscribers in the third quarter, beating analyst expectations.
- At 19%, Asia Pacific had the largest revenue growth rate of all regions this quarter.
- Local content strategy and investment in original content is boosting Netflix’s competitive edge.
Netflix showed investors once again that it is the king of streaming.
In its third-quarter results released Thursday, the entertainment giant added over 5 million new subscribers and beat analyst expectations for a third straight quarter. It reported revenue of $9.8 billion, a 15% increase year over year, and profit growth of 41% year over year.
The crackdown on passwords and growth in advertising-based subscriptions contributed to Netflix’s success this quarter. Company executives and industry experts say growth in Asia had a role to play as well.
“You’ve got Japan. You’ve got Korea. You’ve got Thailand. You’ve got India,” Gregory Peters, the co-CEO of Netflix, said in the earnings call. “This represents, again, that decade-plus investment in those creative communities, working with local storytellers there and making sure that they have the capability to tell their stories in a compelling way.”
In a shareholder letter on Thursday, Netflix wrote that Asia Pacific had the largest revenue growth rate of all regions, at 19%, compared to the same period last year. Revenue growth in North America and Europe, Middle East, and Africa was tied at 16% each.
‘Persistence in Asia’
Some industry experts who reacted to Netflix’s earnings also pointed to its local content creation strategy.
“One of the main things about Netflix is just what they have done internationally,” Ben Silverman, the chairman and co-CEO of Propagate Content, said in a CNBC interview on Thursday.
Instead of just re-expressing content from the US, Netflix has also commissioned content in local languages for local markets, Silverman said.
Netflix’s greatest success story in the region has been the South Korean production “Squid Game.” The first season of the game show-style drama, which was released in 2021 and follows a group of debt-riddled contestants competing in deadly games for cash, has been watched 265 million times globally to date. It’s also amassed 2.2 billion hours of watch time, making it the streamer’s most-watched show of all time, according to Netflix data.
In addition to “Squid Game,” the Korean drama “All of Us Are Dead” is also on the list of Netflix’s 10 most-watched non-English language shows. The rest of the shows on the list are European and Mexican productions, three of which are different seasons of the Spanish hit “Money Heist.”
Last week, the Japanese manga series “Dan Da Dan” charted among the 10 most-watched shows in the US, Netflix data shows.
The variety of original content available of Netflix, and early investments in Japan and Korea, are playing a role in its growth, Dhivya T, the lead analyst of content and platform insights at Media Partners Asia, told Business Insider.
“Netflix’s edge may be in its consistency and persistence in Asia,” the analyst said.
Netflix appears committed to experimenting with different approaches to local content to meet local market needs, whether it’s high-budget originals, licensing free TV dramas, or post-theatrical movies, the analyst said.
“Beyond content, lower pricing and a concerted crackdown on password sharing has also helped boost Netflix’s sub growth in Asia’s emerging markets over the past year,” she added.
Netflix rose 5% in after-hours trading on Thursday. The company’s stock is up 46% this year.
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