Netflix subscriber growth has likely slowed given the growth strategy in focus

Netflix could report its slowest subscriber additions in six quarters on Thursday, thanks to gains from its crackdown on password sharing, with investors looking for signs that emerging ad revenue growth is accelerating.

According to LSEG analyst estimates, the streaming giant likely added 4 million subscribers in the July-September period. Netflix originals such as “The Accident” and “The Perfect Couple” were among the most streamed titles in the U.S. during the quarter, Nielsen data showed.

With enrollment declining, Netflix is ​​trying to shift investors’ attention to other performance measures, including revenue growth and margins. It will stop reporting subscriber data from 2025.

“Their focus is to continue to grow subscribers at healthy levels while leveraging their scale, ability to raise prices and increase advertising dollars,” said Pivotal Research analyst Jeff Wlodarczak.

The company’s ad-supported plan has been growing, but Netflix isn’t providing details on the tier’s financial performance and doesn’t expect it to become a primary growth driver until 2026.

This has raised some concerns about the growth trajectory.

“They make less than a billion dollars a year in advertising in the U.S., and they say it doesn’t make them look good,” said eMarketer television and streaming analyst Ross Benes.

Some analysts have said the company should raise prices and phase out more of its ad-free plans to push customers into the ad-supported tier, as this typically yields more revenue per user.

The company said in July last year that it would stop offering the basic $9.99 per month ad-free subscription to new users in the US and Britain, and phase it out for existing subscribers.

Netflix charges $6.99 per month for the ad tier in the US, while the standard plan without ads costs $15.49 per month.

It hasn’t increased the price of its standard plan since early 2022, while the ad-supported plan has been priced the same since it launched in late 2022.

The company, which operates in more than 190 countries, is expected to report third-quarter advertising revenue of $242.7 million, according to the average of three analyst estimates compiled by LSEG. Total revenue is expected to grow 14.3%, a slightly slower pace than the previous three months, to $9.76 billion.

To attract more advertisers, the streamer is focusing on live events, including sports. Netflix will air the highly anticipated boxing fight between Jake Paul and Mike Tyson in November, followed by the first NFL games in December.

The second season of the popular South Korean drama series ‘Squid Game’, which is expected to be released in December, could help the company attract subscribers in the last quarter of the year.

Netflix shares have risen 12.4% since reporting second-quarter results in July, compared with a 5% gain in the S&P 500 index.

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