(Recommended Changes) by Samrhitha A
Actions taken by Netflix
Fighting password sharing, NFLX.O is expected to have increased subscribers by around 6 million in the third quarter, and the streaming pioneer is expected to lead the way in price hikes after reporting its results on Wednesday.
Netflix, the only major profitable broadcaster, has refused to join rivals such as Walt Disney DIS.N in raising ad-free prices this year, instead restricting the sharing of passwords outside households to take advantage of more than 100 million viewers who use its service without subscribing to it.
“Netflix now appears to be a utility in many markets,” Bernstein analysts said. “The challenge with being classified as a utility is how a more mature company continues to find growth
According to a press report in early October, the company may increase prices after the end of the Hollywood actors’ strike.
Five months after the start of a strike that plunged Hollywood into turmoil, the Writers Guild of America (WGA) last week approved a new contract with major studios.
However, Netflix has weathered the strike well thanks to its larger international presence and robust content lineup.
After a slow start to its advertising plan rolled out last year, analysts expected Netflix to raise prices on its ad-free options in the coming months to encourage more subscribers to switch. On the other level, advertisements help increase revenue per user.
According to analysts, so far most users who have subscribed to Netflix after removing their passwords have opted for the ad-free plans. The standard ad-supported subscription costs $6.99 per month, while the ad-free subscription starts at $15.49.
“With this tactic, Netflix will likely double its ad-supported viewership next year,” said Ross Benes, an analyst at Insider Intelligence. He assumes that Netflix will show users more advertising over time and thus catch up with the competition.
The advertising site is expected to bring in about $188.1 million and add another 2.8 million subscribers in the third quarter ended September, according to Visible Alpha estimates.
Overall, Wall Street expects the streamer to post its strongest quarterly subscriber growth this year, according to LSEG data.
Third-quarter revenue was expected to rise 7.7% to $8.54 billion, the strongest growth in five quarters, driven by strong programming including the latest seasons of “Sex Education” and “Virgin River.”