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Courtesy Of Reuters
Oct 16 (Reuters) – Netflix’s (NFLX.O) crackdown on password-sharing likely boosted subscribers by about 6 million in the third quarter and the streaming pioneer is expected to set the stage for price increases when it reports earnings on Wednesday.
“Netflix now closely resembles a utility in many markets,” analysts at Bernstein said. “The challenge of being labeled a utility is how a maturing company continues finding growth.”
It could hike prices after the end of the Hollywood actors strike, a media report said earlier in October.
Five months after calling a strike that plunged Hollywood into turmoil, the Writers Guild of America (WGA) last week approved a new contract with major studios.
Courtesy Of Reuters
After a slow start for the ad plan launched last year, analysts said they expect Netflix will raise prices of its ad-free options in the coming months to nudge more subscribers to the other tier, where commercials help bring in more revenue per user.
So far, most viewers subscribing to Netflix after the password crackdown have opted for the ad-free plans, analysts said. Its standard plan with ads costs $6.99 a month, while the ad-free plans start at $15.49.
“Using these tactics, Netflix will likely double its ad-supported viewership next year,” said Insider Intelligence analyst Ross Benes. He expects Netflix to show more ads to users over time, catching up with rivals.
The ad tier is expected to bring in some $188.1 million in revenue in the third quarter ended September, with subscriber additions of 2.8 million, according to Visible Alpha estimates.
Reuters Graphics
Overall, Wall Street expects the streamer to post its strongest quarterly subscriber additions this year, according to LSEG data.
Revenue in the third quarter likely rose 7.7% to $8.54 billion, the fastest growth in five quarters, thanks to strong programming that included the latest seasons of “Sex Education” and “Virgin River”.
Reporting by Samrhitha Arunasalam in Bengaluru; Writing by Aditya Soni; Editing by Sayantani Ghosh and Devika Syamnath.
Source: Black Enterprise
