Netflix
’s
NFLX
ad-supported tier has failed to ignite user interest per the latest data from subscription analytics firm Antenna, cited by The Wall Street Journal.
The ad-supported plan accounted for only 9% of new Netflix sign-ups in the United States during November. Netflix launched its ad-supported service on Nov 3 with the basic plan costing $6.99 a month in the country.
Per Antenna, 57% of subscribers either re-joined Netflix or signed up for the first time, while 43% downgraded from higher-priced plans. Moreover, by the end of November, 0.2% of subscribers in the United States were on Netflix’s ad-supported plan.
Netflix Suffers From Waning Interest
Netflix shares declined 52.2% year to date compared with the Zacks
Consumer Discretionary
sector’s fall of 37.5%.
Netflix’s ad-supported plans are expected to help it win customers amid growing competition in a saturated streaming market with services from
Disney
DIS
,
Comcast
CMCSA
and
Apple
AAPL
.
In third-quarter 2022, Netflix gained 2.41 million paid subscribers globally, higher than its estimate of gaining one million users. Netflix added 4.38 million paid subscribers in the year-ago quarter. At the end of the third quarter, Netflix had 223.09 million paid subscribers globally.
Netflix currently expects to gain 4.5 million paid subscribers in fourth-quarter 2022.
However, stiff competition is expected to hurt this Zacks Rank #3 (Hold) company’s prospects. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Disney followed the footsteps of Netflix to offer its ad-supported tier starting Dec 8, 2022. The company’s streaming service Disney+, as of Oct 1, 2022, had 164.2 million paid subscribers compared with 118.1 million as of Oct 2, 2021.
Apple’s streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso.
Comcast’s Peacock also offers a free-to-watch tier with ad support that has about 40,000 hours of content. Peacock is well poised to grow, owing to its vast library of IPs and new productions.
Nevertheless, Netflix is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content.
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