Netflix’s Slowdown in Subscriber Growth
Netflix expects to record its slowest membership increase in the last six quarters. Analysts believe that the company have add around 4 million users between July and September 2023. This slowdown follows Netflix's initial boost from reducing password sharing which has begun to fade. Apart from this popular shows like The Accident and The Perfect Couple helped attract viewers in the US during this period.
As the number of new customers decreases Netflix has changed its focus. Instead of focusing on subscriber numbers the company focuses revenue growth and profit margins. In fact Netflix has already said that it will stop giving subscriber numbers by 2025. Analysts say that Netflix's revenue in the third quarter of 2023 will be $9.76 billion. This is a 14.3% increase from last year.
One way that Netflix plans to increase revenue is through its ad supported subscription tier. It costs $6.99 per month in the US. While the plan has been gaining popularity Netflix has not released full financial data on how well it is doing. Experts believe this ad supported model will become a bigger source of income by 2026. For now Netflix’s ad revenue in the US is expected to reach $242.7 million for Q3 2023.
To further improve revenue Netflix has been making changes to its subscription plans. For example the company stopped offering its $9.99 per month ad free basic plan to new subscribers in the US and UK in 2022. They plan to gradually phase this plan out for existing customers as well.
Netflix is also exploring new ways to attract advertisers and subscribers. Upcoming live events like the Jake Paul vs. Mike Tyson boxing match in November and its first NFL games in December are part of this strategy. Additionally Netflix hopes to see a bump in subscriber numbers when it releases the highly anticipated second season of Squid Game in Q4.
Although slower subscriber growth Netflix's stock has gone up 12.4% since its second quarter reports in July. It has outperformed the overall stock market. Investors are now keeping a close eye on how Netflix manages the move from focusing on subscriber development to focused on revenue and profitability.
