Netflix Earnings: Low Churn And Supply Share Growth Helps Netflix Lead The Way

Wednesday, 22 January 2025, 8:22 am
Press Release: Parrot Analytics

As Netflix gears up to set the industry tone for 2025, its stellar performance in 2024 creates a challenging benchmark to top.

The company’s 83% share price increase—its highest since 2015, predating the launch of Stranger Things—far outpaced Disney’s 22% rise and starkly contrasted with double-digit losses for Warner Bros. Discovery, Comcast, and Paramount Global.

Netflix’s success was powered by three key factors: exceptional subscriber retention, strategic content expansion including live events, and a surge in its supply share of global streaming originals, driving significant gains in corporate demand share.

Netflix’s decision to stop reporting subscriber growth after this quarter points to a deceleration across the industry. To build on its recent success, Netflix can:

• Continue leveraging its dominance in global original content demand.
• Expand further into live events and sports, refining the user experience to address streaming quality issues.
• Strengthen retention strategies in relatively high-churn markets and maintain its competitive advantage in low-churn regions.
• Continue to provide enough value to consumers so that it can keep raising prices and monetizing customers without causing a subscriber exodus.

With its track record of innovation and adaptability, Netflix is well-positioned to lead the streaming and entertainment industry through 2025 and beyond.

Industry Leading Subscriber Growth and Low Churn

• Netflix maintained exceptional subscriber retention across all key international regions:
• APAC: This region has accounted for the second largest average quarterly net adds over the last five quarters. Netflix’s churn rates were the lowest in the industry, hitting 2.17% in Q3 2024. Prime Video had the next lowest churn rate of 3.7% in the same quarter.
• EMEA: This region boasts the largest average quarterly net adds dating back to late 2023. EMEA also saw consistently low churn rates of between 1.85% to 1.88% over the first three quarters of 2024. Paramount+ had the next lowest churn in the region during Q3 2024 at 4.94%.
• LATAM: Netflix’s churn rates here dropped steadily from 1.6% in Q1 to 1.41% in Q3 2024, far outperforming second-place Prime Video’s 4.36% regional churn rate in Q3 2024.
• This impressive retention underscores Netflix’s ability to sustain loyalty among its subscribers globally with a diverse library of programming.

State of the Industry: Supply Trends 2020-2024

• Between the beginning of 2020 and the end of 2024, there has been a 321% increase in the global supply of streaming original titles as leading companies prioritized DTC platforms and chased Netflix’s business model.
• Before 2023, there had not been more than one quarter in a row of a shrinking growth rate in global streaming original supply. Now, this metric has decreased for seven of the past eight quarters.
• The significant slowdown in original content production across the industry, driven by cost-cutting measures starting in 2022 and further exacerbated by the Hollywood labor strikes in late 2023, has created a favorable environment for Netflix. By maintaining a robust content pipeline during this period of industry contraction, Netflix has been able to strengthen its competitive position.

Netflix Supply Share

• One key reason behind Netflix’s resurgence in the past two years has been its content pipeline, which co-CEO Ted Sarandos repeatedly stressed during the 2023 strikes.
• In Q4 2024, Netflix accounted for 24.9% of the total global supply of streaming originals, its highest share since Q1 2022. Q4 2023 also saw a major surge in supply share, at 23.7%. This Q4 surges track with Netflix’s strategy of saving big original releases for the end of the year (The Crown Season 6 and Leave the World Behind in late 2023; Squid Game S2 and Carry-On in late 2024).
• These supply share surges correlated with an increase for Netflix’s global originals demand share in both Q4 2023 and Q4 2024.

Netflix Jumps NBCUniversal for Full Year 2024

• Corporate demand share accounts for all original TV content produced under each company’s umbrella, and can help effectively value a conglomerate’s legacy and library content in aggregate.
• In Q3 2024, Netflix overtook one of the legacy studios in this category for the first time ever, leading NBCUniversal by 0.6%. Netflix further built out that lead in Q4 2024 and for the first time finishes in fourth place in this category for the entire year.
• While fourth place in any category may not sound impressive for Netflix, this dataset is dominated by companies that have existed for over a century.
• This means there is more demand for Netflix’s original TV catalog — which started in 2012 — than that of NBCUniversal — whose original TV programming dates back to the 1940s.
• Netflix was the only one of the top five companies to grow its Corporate Demand Share in 2024:
• Netflix: +0.8%
• Warner Bros. Discovery: -0.3%
• NBCUniversal: -0.5%
• Paramount Global: -0.8%
• Disney: -1.3%

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Parrot Analytics

Global television demand measurement

Parrot Analytics is the leading global content demand analytics company for the multi-platform TV business. With the world's largest TV audience demand datasets, the company currently tracks more than 1.5B daily expressions of demand in over 100 languages from 200+ countries to reveal the content consumers engage with and watch the most across platforms.

As a trusted partner to some of the biggest media companies and content creators in the world, Parrot Analytics optimises content workflows in real time. The company's TV analytics products result in better production, distribution, acquisition and marketing decisions, as well as accelerated SVOD platform success.

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