THE AP: SAN FRANCISCO With a midsummer increase, Netflix reversed recent subscriber losses. Management hopes to continue on this success with the impending debut of a less expensive version of the video streaming service that will have commercials for the first time.
The Los Gatos, California-based business revealed on Tuesday that it gained 2. 4 million customers between July and September, reversing a drop of 1.
In the first half of the year, businesses lost 2 million consumers as a result of increased competition and skyrocketing inflation that is straining household finances.
With 223 million subscribers, Netflix can once again claim the title of largest video streaming service in the world, if only temporarily. Walt Disney Co. eclipsed Netflix in August when it reported its service had 221 million subscribers, a number that will be updated Nov. 8 when Disney is scheduled to report its summertime results.
In a shareholder letter that was released along with the third-quarter data, Netflix stated, “After a challenging first half, we believe we’re on a path to reaccelerate growth.”
The increase in subscribers also contributed to Netflix’s $1. 4 billion ($3. 10 per share) profit, a 4% decline from the same period the previous year. Revenue climbed 6% from last year to $7. 93 billion. The subscriber gains, earnings per share and revenue all topped analyst projections compiled by FactSet.
After the most recent results were released, Netflix’s stock increased by almost 13%. Even still, the stock has nevertheless decreased in value by more than 50% so far this year, reflecting concerns that Netflix’s golden age has come to an end.
With its first ad-supported plan, which launches in the United States and 11 other markets in early November, Netflix, which is once again growing, will try to increase the momentum. In the US, the new option will cost $7 per month, which is less than half of Netflix’s most popular $15 plan.
without commercial interruptions, 50 per month plan.
In a sign of renewed confidence in the company’s future, Investing.com analyst Haris Anwar stated, “Netflix still has a lot of room to grow and take the share in a price-sensitive market.”
Netflix’s management projects it will add 4. 5 million customers between October and December, which may be a clue it doesn’t expect the ad-supported plan to take off right away.
Even while it would represent Netflix’s largest quarterly increase this year, the number of subscribers would still be lower than the 8.3 million that were added during the same Christmas season last year.
Netflix is apparently hoping to de-emphasize Wall Street’s long-running focus on its subscriber growth by stopping to provide forecasts about how many customers it expects to add from one quarter to the next.
The management announced on Tuesday that it would be the final time it would project subscribers for the current quarter, but it would still provide earnings and revenue projections in the hopes that investors would pay more attention to those numbers.
The question of whether the additional revenue from selling commercials will be sufficient to offset the losses from current subscribers who switch to the less expensive option from the higher prices they are currently paying is a major one, despite the fact that investors have generally been positive about Netflix’s entry into the advertising market.
Nearly $7 in income is what Netflix expects.
8 billion, slightly behind what analysts had predicted, for the quarter that includes the holiday season, which often encourages more advertising, according to FactSet. If Netflix meets their revenue projection, it will represent an increase of 4% over the same period the previous year. In contrast, Netflix reported a 16% increase in revenue year over year over the 2021 Christmas season.
However, according to a study by the research firm Insider Intelligence, a sizable portion of Netflix’s income would come from advertising. According to Insider Intelligence, Netflix should get more than $830 million from ads in the US alone the next year, and more than $1 billion in the US in 2024.
With a 3Q gain, Netflix recovers from recent subscriber declines.
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