Netflix expected to report 2 million new subscribers following price cuts and ad-supported plan: details

Netflix is ​​expected to report that it added some 2 million subscribers in the first quarter, and investors will be looking at whether recent price cuts and the launch of an ad-supported plan inspire people to subscribe and stay.

The company, which lost 200,000 subscribers in the last year quarter, returned to subscriber growth in the second half of 2022, but its pace of additions has slowed significantly, forcing it to think about ways to improve. extract revenue from the 100 million people who use the service without paying for it.

To do this, the streaming giant has cracked down in some countries on the sharing of passwords or streaming of Netflix by non-members who do not belong to the same household, which may cause people to abandon the service as a reflex. , but they are likely to return to it, analysts say.

The crackdown will have a “more significant impact” in the June quarter and Netflix could gain more than 10 million new subscribers by converting free users to paid users, said Barton Crockett, analyst at Rosenblatt Securities.

Netflix is ​​expected to add 3.43 million subscribers in the April-June period, according to 16 analysts polled by Refinitiv, compared with 970,000 subscriber losses in the year-ago quarter.

In the quarter that ended March 31, the company is expected to have added 2.07 million net subscribers, compared to a drop of 200,000 subscribers a year earlier. Netflix itself has stopped giving predictions for the metric.

GRAPH – Netflix faces slowing subscriber growth

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Netflix is ​​expected to post nearly 4% revenue growth in the first quarter, according to Refinitiv, marking its second-slowest growth on record after rising nearly 2% in the December quarter.

The March quarter lacked major releases with non-English shows such as Korean revenge drama “The Glory” and the third season of Mexican drama “La Reina del Sur” doing well, according to Jefferies.

Netflix faced strong competition from Walt Disney, Amazon.com and Warner Bros. Discovery. Amazon knocked Netflix out of the top spot in the US last year, according to consultancy Parks Associate.

GRAPH – Netflix stock follows its peers this year

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Warner Bros. announced Wednesday that it will launch a new streaming service on May 23 called “Max,” combining the scripted entertainment of HBO Max with the reality shows of Discovery.

Netflix launched an ad-supported streaming plan in November for $6.99 (around Rs 572) per month in 12 countries, after resisting ads for years. Disney’s Hulu and Disney+ and HBO Max already have ad-supported options.

“The role of advertising continues to grow in importance for premium services (streaming services) as part of their profitable growth strategies,” social media analytics firm Antenna said in a note last month.

“In 2020, only one in five new signups were for ad-supported plans; last year it was nearly one in three.”

© Thomson Reuters 2023

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