Netflix, the world’s leading streaming service fell short of its quarterly membership target, with subscribers increasing by 2.7 million rather than the five million it forecasted.
The result for Netflix was an 11% drop in its market capitalization.
A newly released report suggests that Netflix needs to recalibrate both its engagement and its revenue mix to win over the next 150 million subscribers. “In the era of stalling membership growth, the previously unthinkable becomes thinkable and the A word – advertising – becomes strategically pertinent,” MIDiA Research says.
Netflix lost subscribers in the U.S. – its core domestic market.
Its subscriber count declined by 100,000 people, to 60.1 million.
According to MIDiA Research’s report Netflix After Q2 2019: Post Peak or Strategic Reset, “negative frontline numbers” are looming.
While Stranger Things fandom continues to be a driver of renewed subscriber growth in Q3, “Netflix has its work cut out to return to growth, especially with the imminent launches of well-funded direct-to-consumer propositions from Q3 2019 onward,” MIDiA says.
With Netflix-paying subscribers 6% more likely than the average consumer to pay attention to brands that sponsor shows than those that just have ads, Netflix is currently sitting on found revenue if it proceeds with its gate keeper strategy, it adds.
“Netflix could be the right digital platform to integrate dynamic product placement, which would provide non-intrusive ad revenue for the streaming service and provide brands with access to the 26% of Netflix’s valuable paywalled subscriber base who respond favorably to relevant ads,” MIDiA says.
With growth slowing in “digitally saturated” western markets, “a sophisticated and pragmatic approach to content strategy will be required to ensure return on investment.”
