Netflix Expected to Report 2 Million New Subscribers in Q1 Following Crackdown on Password Sharing
Netflix is expected to report adding about 2 million new subscribers in Q1, after losing 200,000 subscribers in the same quarter last year. The company returned to subscriber growth in the second half of 2022, but the pace of additions has slowed, causing it to seek ways to generate revenue from the 100 million people who use the service without paying for it.
One strategy has been to crack down on password-sharing or streaming by non-members who don’t belong to the same household in some countries. While this may prompt people to drop the service as a knee-jerk reaction, analysts predict they will come back to it. The crackdown is expected to 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.
In the March quarter, Netflix is expected to have added a net 2.07 million subscribers. Refinitiv analysts predict that in the April-June period, Netflix will add 3.43 million subscribers.
Netflix has stopped giving forecasts for subscriber metrics, but Jefferies reports that the March quarter lacked major releases. However, non-English shows like “The Glory” and “La Reina del Sur” performed well.
Netflix faces strong competition from Disney, Amazon, and Warner Bros Discovery. To add to this competition, Warner Bros is launching a new streaming service on May 23 called “Max”, combining HBO Max’s scripted entertainment with Discovery’s reality shows.
To further boost revenue, Netflix introduced a streaming plan with advertising for $6.99 in 12 countries in November. Disney’s Hulu and Disney+, and HBO Max already have ad-supported options. The role of advertising continues to grow in importance to premium streaming services as part of their profitable growth strategies. In 2020, only one in five new sign-ups were to ad-supported plans, but last year, it was nearly one in three.
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