The strong measures of Netflix against password sharing likely increased subscriber numbers by about 6 million in the third quarter, and the streaming pioneer is expected to pave the way for price hikes when it reports results on Wednesday.
Netflix, the only major profitable streaming company, has resisted joining rivals like Walt Disney in raising prices without advertising and, instead, has stopped the sharing of passwords outside the home to take advantage of the more than 100 million viewers who use its service without subscribing.
“Netflix is very much like a utility in many markets,” Bernstein analysts said. “The challenge with being labeled a utility is how a company that is maturing continues to achieve growth.”
Why Netflix prices could rise
Prices could rise after the end of the Hollywood actors’ strike, according to a media outlet in early October. Five months after calling a strike that plunged Hollywood into confusion, the Writers Guild of America (WGA) approved a new contract with the major studios last week.
Netflix, however, has weathered the strike well thanks to a greater international presence and its strong content catalog.
After a slow start to the advertising plan launched last year, analysts expect Netflix to raise the prices of its ad-free options in the coming months to attract more subscribers to the other tier, where ads help drive more revenue per month. user.
Until now, most users who have subscribed to Netflix after the password restriction have opted for ad-free plans, according to analysts. Their standard plan with ads costs $6.99 per month, while ad-free plans start at $15.49.
“Using these tactics, Netflix will likely double its ad-supported viewership next year,” said Ross Benes, an analyst at Insider Intelligence. Benes hopes that, over time, Netflix will show more ads to users and catch up with its rivals.
According to Visible Alpha estimates, in the third quarter, ended in September, advertising revenue will amount to $188.1 million, with an increase of 2.8 million subscribers.
Wall Street expects the chain to post its biggest quarterly increase in subscribers this year, according to data from LSEG.
Third-quarter revenue likely rose 7.7% to $8.54 billion, the fastest growth in five quarters, thanks to strong programming that included recent seasons of “Sex Education” and “Virgin River”.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
