Due to a ban on password sharing, Netflix may report its highest decline in new subscribers in six quarters on Thursday. Investors are looking for signs that the company’s new ad revenue business is growing.
It is estimated by LSEG that the streaming giant added almost 4 million new members during the months of July and September. According to data provided by Nielsen, two original productions from Netflix, namely “The Accident” and “The Perfect Couple,” were the most streamed shows in the United States for the specific period of time.
Read also: Netflix reveals ‘Squid Game’ Season 2 release date in explosive new teaser
Netflix ditches subscribers, eyes revenue growth
As the sign-up rate declines, Netflix endeavours to redirect investors’ focus to other performance metrics, such as revenue growth and margins. Starting in 2025, it will cease to provide subscriber data.
RelatedPosts
“Their focus is to continue to grow subscribers at a healthy clip while also leveraging their scale, ability to raise prices and increase advertising dollars,” USA Today cited pivotal research analyst Jeff Wlodarczak as saying.
Netflix does not disclose the financial status of its ad-supported plan and does not expect it to fuel growth up until 2026.
Its growth trajectory is questioned. “They’re making less than a billion dollars a year in the U.S. on advertising, which seems bad,” said Ross Benes of eMarketer.
Netflix considers price increase, ad-free cuts
According to some experts, the corporation should increase costs and phase out more ad-free plans to encourage customers to upgrade to the commercial-filled tier, which typically generates more income per user.
Last July, the company announced it would phase out the $9.99-a-month basic plan without advertisements for new U.S. and UK users and phase it out for existing members.
Read also: Nigeria generates #2.55 trillion in taxes from Google, Facebook, Netflix, others in 6 months
The plan with ads costs $6.99 monthly on Netflix in the U.S., while the plan without ads costs $15.49 monthly.
It has not raised the price of its standard plan since early 2022, while its ad-supported tier has been priced the same since its launch in late 2022.
In the third quarter, LSEG’s three analysts predict the company, which operates in over 190 countries, to earn $242.7 million in ad sales. Revenue is forecast to climb 14.3% to $9.76 billion, down from 14.3 percent the previous three months.
To attract more sponsors, the streamer is focusing on live events like sports competitions. In November, Netflix will show the highly anticipated boxing match between Jake Paul and Mike Tyson, and in December, it will show its first NFL games.
With the launch of the popular South Korean drama Squid Game in December, Netflix may see an increase in the number of subscribers during the fourth quarter. Netflix stock has grown by 12.4 per cent since the company reported its second-quarter results in July, while the S&P 500 index has increased by 5 percent.