The future for Netflix is daunting

Date:21 July 2022 Author: Juandre

With a second quarter subscriber loss that was better than anticipated, Netflix may have allayed investors’ biggest fears, but a closer examination of the streaming giant’s data shows it still faces formidable obstacles.

Wall Street applauded Tuesday’s subscription figures, which were only somewhat worse than the company had anticipated. Additionally, Netflix predicted that subscriber growth would resume in the current quarter. The shares increased 7.4% on Wednesday, and other media corporations including Walt Disney Co. and Paramount Global also benefited from the upbeat atmosphere.

However, Netflix still saw a 970 000 global subscriber loss for the quarter and is facing more rival competition. It is changing how it operates from the past by cracking down on password sharing and introducing a new, less expensive tier with advertising in order to increase income, according to techcentral.co.za.

Market analyst Adam Crisafulli stated in a post on his website Vital Knowledge that Netflix “may be better-than-feared, but it’s still not good.”

In addition to losing members in its two most important markets, the US and Canada, Netflix is also losing viewers in Europe, the Middle East, and Africa. Although there has been an increase in subscribers throughout Asia, India has also experienced price decreases. Analysts had anticipated that the corporation will add one million new subscribers during the current quarter. And the research group Third Bridge claims the forecast may be “overly optimistic, given an uncertain economic background.”

Without a doubt, the competition is still fierce. House of the Dragon, a prequel to one of HBO Max’s most popular programs, Game of Thrones, will debut in August. The Lord of the Rings: The Rings of Power, a new series on Amazon Prime, premieres in September. Analysts are still dubious of whether Netflix can continue to lavishly invest in new episodes the way it has in the past, despite the fourth season of the popular series Stranger Things offering renewed interest in the service.

In a research note, senior analyst Michael Nathanson of MoffettNathanson stated that as Netflix “pivots into a new period of sluggish top-line growth, the business will now need to dial down content spend in a fiercely competitive market with deep-pocketed rivals.”

The launch of Netflix’s ad-supported tier, according to the company, is anticipated for early 2023. The strategy is contested by certain analysts. According to Pivotal Research Group, the new option may not spur subscriber growth in the company’s key markets and may possibly result in a decline in average revenue per user.

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