As Netflix unveils its first-quarter earnings on Thursday, analysts expect to learn about the streaming giant's pivot to live sports, video games, and ad-supported content.
Netflix has long dominated streaming with its subscription-based business, but recent strategic adjustments suggest a movement away from original content. Disney+, Hulu, and Max have increased their exclusive content efforts, forcing Netflix to find new growth opportunities, per CNN.
Netflix Facing Serious Challenges in Sustaining Lead
Last year, Netflix banned password-sharing, which increased membership numbers. Analysts warn that this campaign may lose its influence.
"Netflix's lead in the streaming wars is well-established. But it is unlikely to repeat the huge subscriber additions it witnessed last quarter as password-sharing boosts recede," noted senior analyst Ross Benes from eMarketer.
Netflix has partnered with external studios and added live and sports programs to broaden its portfolio. Buying "WWE Raw," worth over $5 billion, shows the company's desire to expand its entertainment portfolio. Moreover, Netflix's video game collaborations, especially with "Grand Theft Auto," show its dedication to changing customer tastes.
Wedbush Securities stock analyst Alicia Reese thinks Netflix's multi-faceted content approach is engaging users and recruiting customers at all price points.
Netflix's ad-supported membership tier has also gained attention. The ad-supported tier, which costs less than its conventional plans, has grown rapidly since its inception in late 2022, reaching 23 million customers in January.
In Thursday's Netflix earnings release, industry analysts expect Netflix to reveal its advertising plan as it strives to profit from its engaged audience. In contrast, investors and analysts will closely monitor Netflix's ability to adapt to the quickly changing streaming market and seize new possibilities.
(Photo : Mario Tama/Getty Images)
In an aerial view, the Netflix logo is displayed above its corporate offices on January 24, 2024 in Los Angeles, California.
This update comes after Netflix's recent trouble in Vietnam as the country's Authority of Broadcasting and Electronic Information (ABEI) ordered Netflix to stop advertising and distributing its games by April 25. ABEI stressed Netflix's compliance with Vietnamese online gambling laws on its website, as per a previous TechTimes report.
In Vietnam, Article 31 of the Government's Decree 72/2013/ND-CP governs internet services, online information, and online gaming. The decree protects online material and defines the rights and duties of online content providers.
Netflix Games for mobile phones launched in November 2021 as part of their diversification into gaming. Vietnamese legislation conflicted with improper licensing, prompting the issuance of the ABEI instruction.
Netflix Rivals Implement Password Sharing Crackdown
Meanwhile, following Netflix's strategy, streaming giants Disney+ and Hulu have announced plans to crack down on unauthorized account sharing. Their implementation of stricter regulations will commence in June and conclude by September.
The restriction requires users not living in the same home to have separate accounts, like Netflix, which increased subscriber numbers.
Disney noted a staggered rollout, starting in June in certain nations and markets and expanding later in the year, while not naming the impacted locations.
Disney's move protects its content and boosts revenue by recruiting new members. The crackdown on password sharing changes the streaming market as providers prioritize account security and user authentication.
