Buoyed by the runaway success of “KPop Demon Hunters,” “Happy Gilmore 2” and the second season of “Wednesday,” Netflix’s third-quarter revenue grew 17 percent, with net income increasing by 8 percent, the company said on Tuesday.
The streaming giant said the higher results came from a mix of subscription growth, advertising and other sales.
“KPop Demon Hunters” — a movie produced at Sony Animation but released directly to Netflix at the end of August — is now the most-watched film in the streaming company’s history, with 325 million views. It was also the first Netflix movie to top the box office chart, when it was released for a weekend in August. (It will jump back into theaters over Halloween weekend.)
The movie’s soundtrack has also topped music charts, and costumes for the five main characters are in high demand. On Tuesday, the company announced a deal with Mattel and Hasbro to sell toys, games and role-playing products tied to the movie beginning in 2026.
The company said its third-quarter slate helped push it to a record share of television time in both the United States and Britain, of its most mature markets, according to data from Nielsen and the Barb, a British data company. The company also highlighted its live super middleweight bout between Terence Crawford and Canelo Alvarez as a breakthrough moment for the global audience, attracting more than 41 million viewers worldwide.
Netflix does not break out revenue from advertising, an increasingly important part of the business but not yet a primary income driver, and it no longer reports subscriber growth. But it said that it had its best quarter and is on track to double sales in 2025.
Its overall operating margin, which was expected to come in at 31 percent, dropped to 28 percent. The company said the lower result was because of a dispute with Brazilian tax authorities, and would have otherwise beat the expectations.
Revenue rose to $11.5 billion with net income totaling $2.5 billion, up from $2.36 billion in the third quarter of 2024. Netflix also forecast increased revenue for the fourth quarter but lower operating margin and net income.
Threats to the company are coming from many angles. Paramount Pictures, under the newly cash-flush leadership of David Ellison, is competing for talent deals that offer filmmakers both hefty budgets and theatrical releases — a proposition Netflix is unwilling to bestow. Netflix recently lost its deal with the “Stranger Things” creators, the Duffer Brothers, who chose to make their future projects with Paramount because of the company’s commitment to the theatrical marketplace.
YouTube, the most-watched streaming company, is also aggressively expanding its offerings. Amazon Prime Video is competing on the sports rights front. And content generated by artificial intelligence threatens to flood the internet with other options that could lure viewers away from Netflix.
As a result, the company is intent on diversifying its entertainment offerings to keep subscribers on its service longer.
The company has been investing in new initiatives, including a podcast deal announced with Spotify last week and a fresh strategy on games that will encourage more group play on the service itself.
Analysts are split about the company’s “non-core” business strategies, with some concerned that taking their eye off producing quality content could affect their leading status going forward.
“If the company goes too broad to become all things entertainment, it risks diluting its core,” Mike Proulx, an analyst for Forrester, wrote last week. “The reality is competition like Prime Video is chomping at the bit to dethrone Netflix as the most popular streaming service.”
Others analysts say that turning to podcasting and games offers a more cautious approach.
“Netflix is slyly pivoting its content strategy to rely more on live sports, YouTubers, creators and podcasters,” Ross Benes, an analyst for eMarketer, wrote in a recent note. “To keep viewing time spent high and to grow its ad business, Netflix is evolving from relying on just movies and TV shows to becoming a broader entertainment destination for consumers.”
Nicole Sperling covers Hollywood and the streaming industry. She has been a reporter for more than two decades.
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