When Netflix Inc reports third-quarter results on Tuesday, the streaming pioneer is expected to launch an ad-supported plan in order to compete with rivals such as Disney+ and HBO Max.
Netflix announced last week that it would launch the plan in November for $6.99 per month, much sooner than its previous estimate of early 2023 and Disney+’s December launch. more reading more reading
According to analysts, the long-awaited move will boost growth at a time when the market for connected TV advertising is booming.
“As the most-scaled player in the industry, we expect Netflix to garner strong demand from advertisers seeking the service’s reach and younger demographics,” brokerage UBS Equities said.
To maintain growth, Netflix has raised its plan prices and cracked down on password sharing, while focusing on its mobile gaming efforts.
Refinitiv polled analysts expect Netflix to add slightly more than 1 million subscribers in the third quarter. In the first half of 2022, the company behind hits like “Squid Game” and “The Crown” lost more than 1 million customers.
“This (advertisements) is a significant move that takes Netflix in direct competition with free-to-air broadcasters around the world,” PP Foresight analyst Paolo Pescatore said.
“This could prove to be the final nail in the coffin for these players.”
According to brokerage MoffettNathanson, Netflix could generate $1.7 billion in net US/Canada ad revenue and $1 billion in international net ad revenue in 2025.
According to expectations of analysts, growth in Netflix’s third-quarter revenue should be at 4.8 per cent and touch $7.84 billion when it reports results on October 18. Analysis at Refinitiv also expects the video streaming firm’s earnings per share to be at $2.13.
The share price of the company has dropped by about 50 per cent so far this year but was up by 14 per cent ever since the firm reported its earnings report for the second quarter of the current year.
(Adapted from USNews.com)