Paramount Is Unfazed by Netflix’s Entry Into the Battle for Advertising Dollars

Netflix

Netflix’s (NYSE:NFLX) stock has been on the rise since the company’s second-quarter earnings report was released on July 20. There was good and bad news from the company’s most recent quarter, with the loss of 970,000 paid customers falling short of Netflix’s prediction of a loss of 2 million paying users.

The corporation lost 200,000 global subscribers for the first time in its history during the first quarter. The subsequent 35% decrease in share price was extraordinary. As a result, the firm initiated a wave of layoffs, prompting analysts to question whether the corporation had reached a natural ceiling of customers and whether its reign as the unchallenged king of streaming had reached its conclusion. But Netflix (NYSE:NFLX) also anticipates a return to membership growth in the next quarter, replacing those who have left with 1 million new members.

Netflix (NYSE:NFLX) entered the streaming wars with the largest market share and hoped to emerge as the victor. But a portion of Netflix’s decline in recent quarters can be attributed to introducing new competitors from traditional broadcast networks.

Netflix is under pressure from Paramount+

Paramount+ (NYSE:PGRE), despite being a fresh entrant in the streaming wars, has the backing of Paramount Global (NYSE:PGRE) and the media library of a major film and television studio. Despite the loss of 1.2 million members in Russia, Paramount+ (NYSE:PGRE) added 4.9 million users in the second quarter and had 43.3 million subscribers as of June 30.

The second quarter demonstrates that the corporation is gaining market share in streaming, television, box office, and upfront revenue. It also indicates that the company is strengthening its penetration of the media industry’s most important growth area, streaming, as seen by the addition of nearly 5 million D2C subscribers during the quarter, CEO Bob Bakish remarked.

Paramount (NYSE:PGRE) is one of the few streaming services with a revenue plan that includes subscription and advertising choices. This model increased the company’s direct-to-consumer service revenue by 56% annually. With a 74% increase in subscription revenue and a 25% increase in advertising revenue, overall streaming revenue surpassed $1.2 billion (though those advertising contracts were signed in previous quarters and did not necessarily represent the present environment).

Meanwhile, Netflix (NYSE:NFLX) intends to establish its ad-supported streaming service. John Blackledge of Cowen, a Netflix (NYSE:NFLX) analyst, projected earlier this month that an ad-supported plan might bring in an additional 4.3 million customers in the U.S. and Canada, boosting the company’s global total to about 240 million by the end of next year.

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