Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
Netflix on Tuesday reported stronger-than-expected third-quarter profit but cut its advertising forecast for the year, capping a turbulent stretch for the streaming giant, which in the past week cut 6% of its workforce in its biggest round of layoffs and parted ways with two of its top content executives.
Revenue rose 12% to $12.87 billion, slightly above analyst expectations, the Los Gatos-based company said. Net income jumped 44% of $3.7 billion, and earnings per share of $0.87 beat the $0.82 that analysts surveyed by FactSet had expected.
But Netflix projected slower growth for the remainder of the year, projecting revenue of $13.4 billion, less than what analysts had forecast. The company now expects $2.7 billion in ad revenue this year, down from its earlier forecast of $3 billion, citing a slower-than-anticipated rollout of some ad products capabilities.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Ross Benes, senior analyst at research firm Emarketer.
Netflix’s stock price has fallen 45% from a year ago as investors have grown increasingly worried about a slowdown in growth. On Tuesday, the stock closed at $68.69 a share, down about 2% ahead of the results. In after-hours trading, shares were down about 6%.
Last week, Netflix laid off about 1,000 employees and named former Disney executive Peter Rice as chief content officer, replacing longtime executive Bela Bajaria. On Monday, Netflix announced the exit of its film chief, Dan Lin.
“We want to be the must-have entertainment service,” Netflix co-CEO Ted Sarandos said in an earnings presentation on Tuesday. “The first one members check for a great series or a great film, and the last service they’d ever cancel.”
Sarandos thanked Bajaria for her contributions at Netflix, noting that she did the hard work of building an international team, “a great competitive differentiator for us.” He said he’s known Rice for 15 years and that Netflix needs better execution of content in the U.S. and that it’s not growing as fast as it could.
“I know that we could do better, and we want to build on that momentum,” Sarandos said. “Now we’ve seen an opportunity to take our slate to the next level, especially in the U.S. where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Netflix, widely considered the winner of the streaming wars, is now under scrutiny over how it will better compete against rivals like YouTube, which has claimed a growing share of TV viewing in the U.S. In July, YouTube accounted for 14.2% of all time Americans spent watching TV, compared with Netflix’s 7.8%, according to Nielsen.
Analysts say that Netflix has struggled to find enough new hits to replace its past franchise successes that have ended like “Stranger Things” or “Squid Game.” Some popular shows also saw steep second-season declines this year. The second season of fantasy series “Avatar: The Last Airbender,” which debuted in late June, generated 8.7 million views in its first four days, a 59% decline from its first season.
While Netflix has said that such drops are common, analysts point to other hit shows on rival streaming services like medical drama “The Pitt” that increased its viewership in its second season.
The company sought to boost its library by acquiring Warner Bros. Discovery but pulled out of the auction after it was no longer “financially attractive” for the streamer.
“Netflix has been in a slump ever since they’ve decided to pursue Warner Brothers … that was a huge distraction for the streamer, that whole episode,” said Tom Nunan, a former president of the United Paramount Network (UPN).
Netflix said in a letter to shareholders on Tuesday that its mission is to entertain the world while building a successful business, with the core being streaming TV, film and live events that make money through subscription and ads.
“Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a ‘must-have’ service,” Netflix said in its letter.
The company did not mention games as part of the core of its service. Netflix since 2021 has bought gaming studios and invested in building its games division with mixed results.
Despite Wall Street’s tepid response, some analysts remain bullish on Netflix.
“The street is mistaken in not understanding all of what Netflix can bring,” said Michael J. Wolf, CEO at Activate Consulting. “They do have an engagement challenge, but I’m actually very upbeat about their ability to turn it around.”
Wolf said that Netflix is the default streaming service for many consumers and that the company has opportunities to grow in other markets like the Middle East and Asia, and in its ads business.
“With a new programming direction, they will quickly be able to re-accelerate that growth,” he added.
