Netflix is anticipated to have added approximately 4.82 million subscribers in the second quarter, marking its lowest quarterly addition since the first quarter of 2023. This figure is about half of the 9.3 million subscribers added in the previous quarter, reflecting a slowdown exacerbated by reduced gains from crackdowns on password sharing and viewer attention shifting to summer sports events like the Euro soccer tournament.
Despite the subscriber slowdown, Netflix has seen significant growth in ad revenue following efforts to sell a lower-priced ad-supported tier. It’s estimated that Netflix’s ad revenue has more than doubled in the June quarter. Overall revenue is expected to have risen by 16.4% to $9.53 billion, the fastest growth since the second quarter of 2021.
Netflix’s original content, including popular shows like “Bridgerton” and “Baby Reindeer,” has continued to dominate viewership charts, according to Nielsen data for the second quarter. Investors will be closely watching Netflix’s strategy around expanding its ad-supported plan and updates on new growth initiatives when it reports its second-quarter results.
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The company has reported that its ad-supported tier has reached 40 million monthly active users globally, with 40% of sign-ups originating from countries where it’s available, up from 23 million users in January. This push into advertising has resonated positively with investors, with Netflix’s stock up nearly 35% for the year, outpacing the S&P 500 index.
However, seasonal factors like summer travel and upcoming major events such as the Olympic Games starting on July 26 are expected to impact viewership for Netflix and its competitors like Disney+. Netflix has also been diversifying its content strategy, including acquiring top-streamed titles and expanding into live content partnerships, such as streaming NFL games.
Looking forward, Netflix aims to enhance its advertising capabilities with plans to develop an in-house ad technology platform, potentially offering marketers more effective ways to buy ads and measure their performance. Analysts expect advertising to become a significant revenue contributor by 2025, underscoring Netflix’s long-term strategy amid evolving viewer habits and competitive dynamics in the streaming industry.
