The ad tier is expected to generate approximately $188.1 million in revenue in the third quarter ending in September
Netflix’s crackdown on password sharing likely boosted its subscriber base by about 6 million in the third quarter, and the streaming pioneer is expected to pave the way for price hikes when it reports earnings on Wednesday.
Netflix, the only profitable major streamer, has bucked rivals like Walt Disney this year by raising ad-free prices and instead restricting password sharing outside households to reach the more than 100 million viewers who use the service without subscribing.
“Netflix now looks very much like a utility in many markets,” Bernstein analysts said. “The challenge of being labeled as a utility is how a mature company continues to find growth.”
It could raise prices after the end of the Hollywood actors’ strike, according to a media report earlier in October.
Five months after declaring a strike that roiled Hollywood, 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 strong content.
After a slow start for the ad plan launched last year, analysts say they expect Netflix to raise the prices of its ad-free options in the coming months to push more subscribers to the other tier, where ads help bring in more revenue per user.
So far, most viewers who subscribed to Netflix after the password breach have opted for the ad-free plans, analysts said. The standard plan with ads costs $6.99 per month, while the ad-free plans start at $15.49.
“By using these tactics, Netflix will likely double its ad-supported viewership next year,” said Insider Intelligence analyst Ross Benes. He expects that Netflix will show more ads to users over time, overtaking the competition.
According to Visible Alpha estimates, advertising levels in the third quarter ending in September are expected to bring in about $188.1 million in revenue, with an additional 2.8 million subscribers.
Overall, Wall Street expects the streamer to post its strongest quarterly subscriber additions this year, according to LSEG data.
Third-quarter revenue likely rose 7.7% to $8.54 billion, the fastest growth in five quarters, thanks to strong programming including the latest seasons of “Sex Education” and “Virgin River.”
(This story has not been edited by DailyExpertNews staff and is auto-generated from a syndicated feed.)
