Stranger things series: Netflix expecting subscribers growth by end of Q3

Eberechukwu Etike
Netflix’s total revenue for the first quarter of 2022 increased nearly 10% to $7.87 billion, falling short of analysts’ expectations of $7.93 billion…
Netflix sacks 150 employees
Netflix sacks 150 employees

Netflix may slowly be picking up the pace on its numbers. The streaming platform is expecting one million new subscribers by the end of the third quarter of 2022.

Although this is low when compared with the 1.83 million analysts had predicted that Netflix will gain within the same period, the number does well to overturn the losses of the first half.

The streaming giant has lost over a million subscribers this year- 200,000 in the first half of 2022 and 970,000 subscribers in the second half of 2022. The company’s management has admitted with relief that it could have been worse as the quarterly loss of subscribers was less than what the company has forecasted.

Netflix may be regaining its subscribers owing to the introduction of the new season of Stranger Things, the service’s most popular English language series. Having experienced its worst subscriber losses ever and not expecting a return to rapid growth anytime soon, this current three-month period might be worthwhile for the streaming company.

Read Also: Again, Netflix sacks 150 full employees amidst revenue, subscription decline

Netflix shares and revenues

While Wall Street and Hollywood have long predicted that online streaming may be the future of entertainment, the current state of the largest online streaming platform, Netflix, has put a question on the certainty of their predictions.

Stranger things series: Netflix is expecting subscribers growth this quarter
Netflix remains positive despite losing 1 million subscribers this year. Photo Credit: Fortune

According to CNN Business, Netflix’s stock price dropped by 35 per cent (%) in April, erasing $50 billion from the company’s value. Recall that its shares peaked at $597 at the start of the year before falling to $376 in April. Netflix shares price per unit has recently reached a high of $225 (€219.89) in extended trading before closing at $201.63 (€197.05) in New York on Tuesday, down 67%.

Similarly, Netflix’s total revenue for the first quarter of 2022 increased nearly 10% to $7.87 billion, falling short of analysts’ expectations of $7.93 billion. Net income fell by 6.4 per cent to $1.6 billion in the fiscal quarter ended March 31. This is down from the $1.7 billion of the previous year.

According to Bloomberg, revenue also increased by 8.6 per cent in the second quarter to $7.97 billion. Because of the strong dollar, this fell short of Wall Street’s estimate of $8.04 billion (€8.2 billion). Revenues for the third quarter of this year are expected to increase by 5 per cent. Netflix anticipates revenue of $7.84 billion, a little below Wall Street’s estimate of $8.1 billion.

Meanwhile, the company reported that its share of total US television viewership reached an all-time high of 7.7 per cent in June,

Read Also: Economic downturn: Apple, Amazon, and Microsoft reportedly slowing down on hiring

Netflix plans for survival

The decline in Netflix subscribers has been a global challenge.

The company announced that it lost 1.3 million customers in the United States and Canada, its largest region, and another 770,000 in Europe, the Middle East, and Africa.  However, it experienced growth progress in the Asia-Pacific region with 1.1 million customers after lowering prices in India.

Netflix Earns Record $1.7bn Profit but Africa Only Posts 0.32% of Global Revenue in Q1 2021

The streaming giant is, however, actively looking for ways to balance its performance growth. The company is working towards increasing its revenue and subscription by improving its product, content, and marketing, and finding alternative ways to monetize our large audience.

To strengthen its position, the company intends to launch a lower-cost version of the service with ad-supported options, in collaboration with Microsoft. It has also started charging customers who use shared password accounts. In addition, instead of the traditional method, the streaming platform has begun releasing new episodes of shows in batches. The streaming service has also increased the cost of its subscription plans.

This strategy, Netflix believes, will extend the life of its most popular shows while retaining subscribers.

Netflix aims to launch a cheaper, ad-supported plan in early 2023

Netflix will introduce a new subscription plan that will serve up ads. It will sit alongside the classic ad-free offerings, but it will be cheaper.

There is no word on Netflix’s pricing for the ad-supported tier. Currently, the cheapest Netflix-subscription plan in Nigeria costs ₦1,200 a month.

Our lower-priced advertising-supported offering will complement our existing plans, which will remain ad-free.

Netflix says it plans to “start in a handful of markets where advertising spend is significant.”

“Our intention is to roll it out, listen and learn, and iterate quickly to improve the offering,” a letter to Shareholders reads.

“Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners. While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).”

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