Lookahead: Ad tier to distract from falling Netflix subscribers
Netflix’s new ad tier could act as the perfect distraction for falling subscribers, as the streamer gears up for its third quarter results tomorrow evening, analysts said.
With Netflix estimated to add one million new signups globally in the latest quarter, Cowen & Co analyst John Blackledge said that heavier focus may be placed the new ad tier opportunity, stating that they could “partially offset any weakness in reported third-quarter member net adds”.
He said in a research note that advertising offered a “significant opportunity to unlock member growth,” as reported by the Hollywood Reporter.
JP Morgan analyst Doug Anmuth echoed this point in his own note. “The Netflix narrative has shifted from slow/no sub growth on the current business to advertising and paid sharing,” Anmuth said, adding that advertising would be critical to re-accelerating revenue growth for the company.
Netflix has posted a steady stream of disappointing results, posting a 200,000 subscriber loss in April, which tumbled a further 970,000 in June.
Shares have also plunged nearly 60 per cent this year, battered by the wider tech sell-off and cost of living concerns.
However, in a bid to lure customers back and keep the ones it has, Netflix said it would be launching its new UK ad-supported tier in November, costing Brits £4.99 a month.
It comes as new data from Kantar Worldpanel found that almost one million British households ditched their subscriptions this year, driven by the “need to save money”.