India becomes Netflix's second-largest market for subscriber growth in June quarter

Netflix Co-Chief Executive Officer Theodore A Sarandos highlighted India’s vast growth potential, as the country emerged as the second-largest market for the streaming giant in terms of net paid subscriber growth, contributing to the addition of over 8 million new subscribers globally in the second quarter.

“India’s growth is a story that we see around the world playing out very similarly...there’s certainly plenty of room to grow in India as long as we keep thrilling our audiences there,” Sarandos noted during the company Q2 earnings call.

The world’s most populous country claimed the third spot for percent revenue growth, as the US-based firm reported $9.6 billion in revenue, marking its highest year-on-year increase in over four quarters at 16.8%.

The growth in net paid subscribers and revenue in India was fuelled by hit titles like Heeramandi: The Diamond Bazaar and Amar Singh Chamkila, along with licensed films such as Laapataa Ladies and Shaitaan, the US-based company said in a letter to investors.

Sanjay Leela Bhansali-directed Heeramandi, with 15 million views, is Netflix’s biggest drama series to date in India. In Q2, it had a variety of hit series like Bridgerton S3, Baby Reindeer, Queen of Tears, and The Great Indian Kapil Show, and films like Under Paris, Atlas and Hit Man and The Roast of Tom Brady, which attracted its largest live audience yet.

In Q2, Netflix’s global paid memberships rose 16.5% year-over-year to 277.65 million from 238.39 million in the year-ago period. Its global streaming paid net additions increased 36.7% year-on-year. 

Paid net additions represent the net change in the number of paid subscribers, calculated as new subscriptions minus cancellations within a specific period. It is an important metric for evaluating the growth of the company’s subscriber base.

Netflix reported a net income of $2.15 billion, or $4.88 per share for the June-ended quarter, up from $1.49 billion, or $3.29 per share, in the same period last year.

The California-headquartered firm said it’s making steady progress scaling its ads business as the company’s ads tier membership grew 34% quarter-on-quarter. “We’re building an in-house ad tech platform that we’ll test in Canada in 2024 and launch more broadly in 2025,” it added.

Advertising is becoming an increasingly important business model for media companies in the streaming market. Netflix’s ad-supported tier is a clear example of this trend. Its efforts to curb password sharing, designed to increase the number of paying subscribers, further contribute to its revenue growth.

Netflix’s ads tier, launched 18 months ago, now accounts for over 45% of all sign-ups in its ads markets.

“Our ad revenue is growing nicely and is becoming a more meaningful contributor to our business...Based on everything we’ve learned and our progress over the last 18 months—we’re confident that advertising will be a key component of our longer-term revenue and profit growth,” it remarked in the letter to investors.

The streaming company now anticipates full-year revenue growth of 14% to 15%, up from its previous forecast of 13% to 15%.

It forecasted a 13.9% year-over-year revenue growth for the third quarter of 2024. “We expect paid net additions to be lower than Q3’23, which had the first full quarter impact from paid sharing,” the streamer remarked. 

Netflix Chief Financial Officer Spencer Adam Neumann pointed out that the company continues to expect approximately 6 billion in free cash flow this financial year.

The combined market for streaming, pay TV, film, games, and branded advertising exceeds $600 billion, with Netflix currently capturing only about 6% of that revenue.

The company said looking ahead, it sees its biggest opportunity in capturing a larger portion of over 80% of TV time—encompassing both traditional broadcast and modern streaming formats—that is currently not dominated by Netflix or YouTube.

(The headline has been updated)