Netflix Bracing for Video Ads Battle in 2024 – Analysts Eye Earnings Report Release

As Netflix prepares to release its fourth-quarter results after the bell, all eyes are on the streaming giant, which has been crowned the winner of the streaming wars.

However, industry experts state that Netflix is entering a new phase, particularly in the battle for video ads, as the streaming landscape rapidly evolves.

Earnings Expectations and Subscriber Numbers

As per The Wall Street Journal, analysts anticipate Netflix to report earnings of $2.22 per share, a substantial jump from 12 cents a year ago, with revenue expected to reach $8.72 billion, up from $7.85 billion.

The company closed the third quarter with an impressive 247 million paying subscribers, maintaining a seemingly insurmountable lead over its competitors.

Competition for Video Ads

Analysts also indicate that the battle for video ads is emerging as a critical front in the streaming wars of 2024. Netflix, once hailed as the undisputed leader, faces challenges in the ad space.

This Insider report also tells us that despite boasting a monthly active user base exceeding 23 million on its ad-supported tier, advertisers remain lukewarm, citing concerns about scale in comparison to competitors like Disney+.

Amazon is set to intensify the competition, launching ads on Prime Video on January 29. With a default audience of 115 million monthly users, Amazon's scale poses a significant threat to Netflix.

Analysts question Netflix's ability to attract ad dollars, given Amazon's reach and additional ad products tied to events like the NFL's "Thursday Night Football."

Competition for Viewers

While Netflix dominates the streaming market, competition for viewers is intensifying on multiple fronts. Internationally, Netflix faces pressure from local players and streaming giants like Disney.

Closer to home, rivals such as Amazon are aggressively expanding into live sports, an area Netflix has been cautious about.

Furthermore, the recent departure of longtime movie chief Scott Stuber raises questions about Netflix's film strategy. This comes as Paramount+ and Peacock exhibit substantial monthly user growth, challenging Netflix's status quo.

Booming Production Costs

Insider also mentions that Netflix's advantage over competitors during the Hollywood strikes may now be turning into a challenge. Analysts predict increased content bills as the strikes end, with settlements requiring Netflix to navigate rising production and content costs.

Furthermore, as Netflix relies on emerging markets for growth, it may face stiffer competition for local content, further impacting production expenses.

Questions linger about the effectiveness of Netflix's ad tier and password-sharing crackdown in driving subscriber growth. Analysts express uncertainty regarding how much more growth the ad tier can generate, especially with the looming competition from Amazon.

Additionally, the impact of Big Tech's ability to fund streaming services indefinitely poses a long-term concern. It could potentially keep subscription prices depressed for Netflix and other players in the industry.

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