Netflix’s next growth chapter hinges on keeping viewers hooked

Netflix is under pressure to reassure investors about its growth strategy when it reports second-quarter results on Thursday, as its user engagement has faltered amid growing competition from traditional media players, YouTube and mobile viewing.

The streaming giant has shed over a fifth of its value this year due to doubts about its growth efforts, including an ad business that is still far from becoming a major revenue stream.

Here are more details:

• The company is expected to report a 13.6% rise in revenue to $12.59 billion, its slowest growth in over four quarters, while adjusted earnings per share will likely total 79 cents, according to analysts polled by LSEG.
• The advertising business — seen as crucial to Netflix’s growth since the boost from its password-sharing crackdown and price hikes over the past two years fades — is expected to bring in $705.8 million in revenue.
• “We had to lower our (advertising) forecast,” Emarketer analyst Ross Benes said, adding the ad business has not grown as strongly as most analysts originally expected.
• To draw in advertisers and boost engagement, Netflix has pushed into live events. CNBC reported that the company was exploring a bid for the 2030 and 2034 FIFA World Cup U.S. rights, and in talks to acquire online film platform Letterboxd.
• “The company has moved from disruption to dominance, and the challenge now is to sustain momentum from a much larger base,” PP Foresight analyst Paolo Pescatore said.

Reuters