Netflix Stock Soars, Exceeding Expectations and Expanding its Ad-Supported Tier

A Look at Netflix’s Impressive Performance and Future Projections

Netflix, the streaming giant, experienced a remarkable surge in its stock prices, rising by a substantial 13%. This surge was driven by several key factors, including a crackdown on password sharing and growing interest in its new ad-supported subscription tier. In this detailed analysis, we’ll delve into the latest developments and financial results that have cemented Netflix’s dominance in the streaming world.

Subscriber Growth Beats Expectations

During the recently closed quarter, Netflix witnessed a surge in global subscribers, adding a remarkable 8.76 million new members. This figure significantly outpaced Wall Street’s expectations, which had predicted an addition of 5.49 million subscribers. Notably, this surge in subscribers marks the most substantial quarterly increase since the second quarter of 2020 when the world was grappling with Covid-19 restrictions, and people sought entertainment from the comfort of their homes.

Impressive Financial Performance

The financial results further underscore Netflix’s strength in the streaming industry:

  • Earnings: Netflix reported earnings of $3.73 per share, exceeding the expected $3.49 per share, as per LSEG (formerly known as Refinitiv).
  • Revenue: The company’s revenue stood at $8.54 billion, meeting the expected figure of $8.54 billion, also according to LSEG.
  • Total Memberships: Netflix’s total membership reached 247.15 million, surpassing the anticipated 243.88 million, based on estimates from Street Account.

Rapid Growth in Ad-Supported Memberships

Netflix’s ad-supported membership saw remarkable growth, with a quarter-over-quarter increase of nearly 70%. Although the specific percentage of its user base subscribed to this tier remains undisclosed, this growth signifies the popularity of this new offering.

Pricing Strategies Reflect Dominance

One of the indicators of Netflix’s dominance is its pricing power. While the ad-supported tier remains at $6.99 a month in the U.S., the basic and premium services are experiencing price hikes. The basic plan will now cost $11.99 (up from $9.99), and the premium plan will be $22.99 a month (up from $19.99), while the standard plan remains at $15.49 a month. These price adjustments align with Netflix’s efforts to enhance profitability while managing the increasing costs of content production.

Industry-Wide Impact on Wages and Content Creation

Netflix, in its agreement with Hollywood’s writers, is part of the Alliance of Motion Picture and Television Producers (AMPTP), which has agreed to higher wages and monetary benefits based on streaming popularity. However, ongoing negotiations with striking actors and their demands for a per-subscriber levy unrelated to viewing or success have added complexity to the situation. Netflix remains committed to reaching an agreement with actors, but the timeline for further talks remains uncertain.

Future Projections

Looking ahead, Netflix anticipates an 11% increase in revenue in the fourth quarter, reaching $8.69 billion, slightly below Wall Street’s expectations of $8.77 billion. The company also expects net subscriber additions to remain similar to the third quarter. It’s worth noting that the strength of the U.S. dollar in recent months may exert a drag of approximately $200 million on fourth-quarter revenue.

Regarding profitability, Netflix expects its full-year 2023 operating margin to be around 20%, at the high end of its previously forecasted range of 18% to 20%. Looking further into the future, Netflix envisions operating margins of 22% to 23% for full-year 2024.

Executive Compensation and Future Changes

Addressing shareholder concerns about executive compensation, Netflix announced plans for “substantial changes” in its compensation model in 2024, transitioning to a more conventional approach while still being performance-based. Notably, former co-CEO Reed Hastings and co-CEO Ted Sarandos received substantial earnings in 2022, with Hastings primarily in stock options and Sarandos opting for a $20 million base salary alongside stock incentives.

Following Greg Peters’ appointment as co-CEO and Hastings’ departure, the company introduced a salary cap of $3 million for executives. However, they will still be entitled to an annual target bonus and additional stock rewards.

David Beckham’s Meticulous Approach to Life Beyond the Pitch

Precision on the Pitch and in the Kitchen

David Beckham, the iconic soccer superstar celebrated for his unrivaled precision on the soccer field, extends his unwavering commitment to excellence to the realm of domesticity. In an exclusive preview from the highly anticipated Netflix documentary “Beckham,” the former soccer legend and doting father of four peels back the curtain on his lesser-known penchant for maintaining an immaculate kitchen.

Beckham’s Kitchen Cleaning Ritual

In a moment of candid revelation, while effortlessly preparing a steaming cup of coffee for the documentary’s director, Fisher Stevens, Beckham, now 48 years old, nonchalantly remarks, “It’s pretty clean, because I clean it so well.” It’s in this unguarded moment that we catch a glimpse of Beckham’s meticulous nature beyond the soccer field.

In the midst of light-hearted banter, Beckham playfully observes that his domestic prowess often escapes the discerning eye of his wife, the illustrious Victoria Beckham, who gazes on with an air of amusement from a nearby table. With a mischievous grin, Beckham jests, “And I’m not sure it’s actually appreciated so much by my wife, in all honesty.”

Delving further into the intricacies of his nightly cleaning routine, Beckham elaborates, “The fact that when everyone’s in bed, I then go around, clean the candles, turn the lights to the right setting, make sure everywhere’s tidy, because I hate coming down in the morning and there’s cups and plates and bowls … it’s tiring.” His dedication to maintaining the perfect ambiance is truly admirable, as he adds, “It’s tiring going around to every single candle, cleaning it, clipping the wick … I clip the candle wicks, I clean the glass, it’s my pet hate, the smoke around the inside of the candle. I know, it’s weird.”

Beckham’s Idiosyncrasies in the Documentary

These quirks and meticulous habits become a captivating backdrop to the legendary athlete’s multifaceted story, meticulously told through four compelling segments and presented from various perspectives. The documentary artfully weaves together interviews with Beckham’s parents, former teammates, and his esteemed Manchester United coach, the legendary Alex Ferguson.

Director’s Surprising Discovery

Director Fisher Stevens, initially unfamiliar with the full extent of Beckham’s athletic prowess, embarked on a remarkable journey of discovery. He reflects, “I started digging around, and then I met with him and I said basically, ‘You were really good.'” Stevens, best known for his work on “Succession,” was pleasantly taken aback by Beckham’s candid openness and his resolute desire to share his life story, noting, “He wasn’t what I expected at all. He was so open.”

Stevens, still visibly awestruck, couldn’t contain his amazement at the breadth and depth of Beckham’s life experiences, exclaiming, “Jesus, this guy’s life is nuts. Nuts.” He enthusiastically expressed his anticipation of collaborating with Beckham and his equally dynamic wife, Victoria, describing them as an engaging, fun-loving couple who promised both delightful surprises and challenges in the making of this documentary.

Focusing on Relationships in the Film

Director Stevens underscores his overarching goal of highlighting the pivotal relationships that have shaped Beckham’s extraordinary life journey. He aimed to craft a narrative centered on family dynamics and the profound influence of father figures, including Beckham’s biological father and the revered Sir Alex Ferguson. Additionally, the documentary delves into the enchanting love story between Beckham and his wife, providing an intimate look into their enduring bond as a family unit.

David Beckham’s Post-Retirement Success

As the documentary artfully captures the zeniths and nadirs of Beckham’s illustrious career, Stevens was particularly struck by how the athlete’s innate talents and attention to detail seamlessly translated into his post-retirement life. He noted Beckham’s inherent warmth, his acute ability to empathize and understand people, and his unique capacity to stay firmly anchored in the present moment. These qualities, Stevens asserts, have not only contributed to Beckham’s enduring success in the world of business but have also made him a natural when it comes to interpersonal relationships.

A Talent Beyond the Soccer Field

Stevens concludes by reflecting on Beckham’s exceptional abilities, both on and off the soccer field. He emphasizes that Beckham’s genius extends beyond his remarkable prowess as a soccer player, manifesting in his uncanny ability to anticipate moves, not only in the realm of sports but also in the complexities of real-life situations. This innate intelligence has undoubtedly played a pivotal role in his entrepreneurial ventures and his remarkable capacity to navigate diverse social landscapes. Beckham’s unique ability to remain acutely present, even in the most challenging circumstances, is indeed a talent to be celebrated.

Netflix to Launch New Ad-Based Basic Plan on November

Netflix will launch a new low-cost ad-based plan in November after a massive drop in subscriber numbers and growing competition from other streaming platforms.

For $ 6.99 per month, the Basic with Ads plan includes ads for 15 to 30 seconds before and during shows and movies. Additionally, it will have a smaller content selection due to licensing restrictions. As a result, ads are shown on average four to five minutes per hour.

The new plan does not offer users the ability to download content for offline use.

The announcement comes after the company experienced a decline in subscribers for the first time in more than a decade this year, dropping by at least 200,000 in the first quarter of this year. As a result, the company fired more than 150 employees, dozens of contractors and part-time workers in May.

As Netflix faces a significant drop in subscribers, streaming competitor Disney+ is gaining more subscribers, specifically millions. Walt Disney Co. announced in August that Disney+ drew 14.4. million subscribers for the quarter ended June 30.

Netflix’s ad-free service was formerly “a deep part of our brand proposition,” per a letter to shareholders by the company in 2019. 

“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction,” the letter said. 

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Basic with Ads After a Subscriber Decline

However, as the pressure from streaming competitors grows and the subscriber count drops, Netflix Executive Reed Hastings stated in April that the streaming giant is considering lower-priced offerings with ads. 

“Those who have followed Netflix know that I have been against the complexity of advertising and a big dan of the simplicity of subscription,” Hastings stated during the first-quarter-earnings call in April. 

“But as much as I am a fan of that, I am a bigger fan of consumer choice – and allowing consumers who would like to have a lower price and are advertising tolerant to get what they want makes a lot of sense.” 

Viewers are offered stream content in high-definition video quality of up to 720p on one supported device at a time under the Basic with Ads plan. But ads will not appear in any Netflix games. 

Alongside the release of the lower-price plan, Netflix will improve its Basic plan, at $9.99 a month, from standard definition (480p) to HD. 

The Basic with Ads plan will be accessible in 12 countries and will be released in the United States on November 3.

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Photo: Unsplash

Netflix Takes Out LGBTQ Tag from Dahmer After Being Slammed by Audiences

Netflix has silently taken out the LGBTQ tag from Dahmer by Ryan Murphy after being bashed by audiences. 

After the release of Monster: The Jeffrey Dahmer Story, the true crime series about a convicted serial killer Jeffrey Dahmer (portrayed by Evan Peters), on September 21, audiences criticized the chosen category it was tagged, referring to it as “gross” and “wrong,” according to the Los Angeles Times. 

A TikTok user ranted that although it is “technically true” considering that Dahmer was gay, “this is not the representation we’re looking for.” 

The series follows Dahmer’s murders and how he dismembered 17 men and boys between 1978 and 1991 – many of whom were people of color. 

The series, also featuring Niecy Nash, Richard Jenkins, and Molly Ringwald, and its retelling has been billed as one through the point-of-view of the victims – a few of the victims’ families do not agree, though. 

The sister of one of the victims of Dahmer, Rita Isbell, slammed the adaptation in an essay for Insider issued this week. Isbell’s heartbreaking victim impact statement, given in court at the 1992 sentencing of Dahmer, was adapted into the show. 

“I was never contacted about the show,” she said. “I feel like Netflix should’ve asked if we mind or how we felt about making it.” 

She added, “They didn’t ask me anything. They just did it.” 

After she watched parts of the series, she wrote, “it bothered me, especially when I saw myself – when I saw my name come across the screen and this lady saying verbatim exactly what I said. It brought back all the emotions I was feeling back then.” 

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The Dahmer Case

She continued that it was not money for her but the children of the victims. 

“I’m not money hungry, and that’s what this show is about: Netflix trying to get paid. I could even understand it if they gave some of the money to the victims’ children. Not necessarily their families,” she said. 

“I mean, I’m old. I’m very, very comfortable. But the victims have children and grandchildren. If the show benefited them in some way, it wouldn’t feel so harsh and careless. It’s sad that they’re just making money off of this tragedy.” 

Lindsey’s cousin, Eric Perry, offered the same sentiment as Isbell, slamming the show on Twitter. 

“It’s retraumatizing over and over again, and for what?” he tweeted. “How many movies/shows/documentaries do we need?” 

Perry added a follow-up tweet: “Like recreating my cousin having an emotional breakdown in court in the face of the man who tortured and murdered her brother is WILD.”

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Photo: Cheatsheet