The over-the-top (OTT) streaming service Netflix is expected to report the addition of nearly two million subscribers in the January-March quarter. Investors will also examine whether the recent price cuts and the launch of an ad-supported plan are intriguing people to subscribe and stay on.
The company lost up to 200,000 subscribers in the first quarter of 2022, however, the number of subscribers started growing in the second half but with a dramatically slow pace of addition. Amidst stiff competition from rivals, Netflix was prompted to think of ways to extract revenue from the 100 million people who use the service without paying for it.
In order to do that, the streaming giant announced a new feature in some countries for cracking down on password-sharing or streaming Netflix by non-members who don't belong to the same household, which may lead people to drop the service as an automatic response but they are expected to come back to it, said analysts.
According to Reuters, Rosenblatt Securities analyst Barton Crockett said, "The crackdown will have a more meaningful impact in the June quarter and Netflix could gain more than 10 million new subscribers as it converts free users to paid ones."
Netflix is expected to add 3.43 million subscribers in the April-June quarter, compared with 970,000 subscriber losses in the year-ago quarter, according to 16 analysts polled by Refinitiv.
In the March quarter, the company is expected to have added a total of 2.07 million subscribers, in comparison to a drop of 200,000 subscribers a year earlier.
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According to Refinitiv, Netflix is set to post nearly 4 per cent revenue growth in first-quarter, making it second-slowest growth ever after a nearly 2 per cent rise in the December quarter of 2022.
The March quarter lacked major releases however the non-English shows such as Korean revenge drama "The Glory" and the third season of Mexican drama "La Reina del Sur" did well, according to Jefferies.
Netflix has faced strong competition from rival OTT platform like Walt Disney, Amazon.com and Warner Bros Discovery. Netflix lost its top spot to Amazon in the United States 2022, said the consulting firm Parks Associate.
Warner Bros on Wednesday announced the launch date of a new streaming service on May 23 called "Max", which is a combination of HBO Max's scripted entertainment and Discovery's reality shows.
After resisting commercials for years, Netflix in November introduced an ad-supported plan "Basic With Ads" for $6.99 (roughly Rs 572) per month in 12 countries. Other OTT platforms like Disney's Hulu, Disney+, and HBO Max already have ad-supported options.
"The role of advertising continues to grow in importance to premium (streaming services) as a part of their profitable growth strategies. In 2020, only one in five new sign-ups were to ad-supported plans; last year, it was nearly one in three," said social media analytics firm Antenna last month.
