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Netflix co-CEOs Ted Sarandos and Greg Peters acknowledged a slowdown in US viewing and advertising sales during a call with Wall Street analysts on Tuesday. The discussion followed the company’s third-quarter earnings release and came after Netflix made the dramatic decision to remove chief content officer Bela Bajaria and film chief Dan Lin from their roles. Peter Rice stepped in as Bajaria’s successor on October 15.
Peters Points to Strong Fundamentals Despite US Softness
Greg Peters moved quickly to reassure analysts about the company’s overall health. He admitted that Netflix is experiencing a soft period in the United States. However, he argued that the platform’s underlying fundamentals remain strong.
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Peters highlighted subscriber churn as a key indicator of the platform’s value. He said churn rates — measuring how many subscribers leave and rejoin the service — performed better than expected in the US and globally during the quarter. This was especially notable, he noted, because Netflix had recently raised its prices.
“The quality, quantity and variety of viewing remains healthy and it drives our business model,” Peters told analysts. “The best evidence that we’ve got that we’re delivering that value is churn. We’ve got healthy retention in every region.” For the quarter ended September 30, churn improved on both a global and US basis.
Peters also pointed to the company’s recent price increases as further proof of subscriber confidence. “The ultimate determinant of are we delivering that value is the reaction to price changes,” he said. “Those recent price changes, including in the United States, have gone well. We’ve seen results that are consistent with past changes.”
International Markets Drive Growth
While the US showed weakness, Peters said most international regions delivered strong viewing and engagement. Local content, in particular, played a significant role in driving that growth.
Peters singled out India as a standout example. “Our local titles from those regions are driving engagement and they’re driving business growth,” he said. He noted that viewing hours in India grew 24 percent on an absolute basis in the third quarter. Per-member viewing also increased, which Peters said directly supports membership growth.
Sarandos echoed that sentiment and pointed to strong performances in Korea, Japan and the Nordic markets. “India is a great example, but that success is also happening in Korea and Japan,” he said. “When we look to the Nordics, which is a very mature market for us, that content slate is killing it there.” He added that the results prove Netflix can drive significant global business impact when it makes the right creative choices.
New Leadership and a Focus on Breakout Hits
As the management shake-up settles, Sarandos told analysts that Netflix is now sharply focused on producing content that breaks through as major hits. He acknowledged that the streamer had delivered solid but not spectacular results in some areas this year.
“We had some really solid doubles and triples this year,” Sarandos said. “But the other territories count on some of those titles being home runs so that they’ll travel around the world. We’re focusing on that execution.”
Sarandos expressed confidence in Peter Rice’s ability to lead that effort. He said Rice “brings expertise in both art and commerce, television and film” and that this skill set would help guide Netflix through its next chapter.
Meanwhile, chief financial officer Spencer Neumann offered additional reassurance about the company’s business model. He stressed that Netflix does not rely too heavily on any single title, genre or region to sustain growth. “Even with modest view-hour growth, we’re delivering increasing value to our members across quality, quantity and variety of viewing with a steady drumbeat of big hits in most regions,” Neumann said. “We’re not overly dependent on any one title, nor outsized performance by any one region to deliver healthy growth.”
