Netflix Still Sees Room to Grow Engagement; How Can World’s Largest Streamer Build Viewing Hours?
Earlier this week, Netflix announced its earnings for the fourth quarter of 2022 in a call with investors and media members. The service now claims 230.75 million global subscribers and added more than 7.5M new users between October and December 2022.
Given that those numbers make Netflix the world’s largest streaming service by a comfortable margin (Disney+, the second-largest, last reported having 164 million global users), it’s fair to wonder how exactly the company can continue to grow. But Netflix executives who spoke during the earnings call think there’s big room for improvement, thanks to continuing declines in linear TV viewership.
“There’s an incredible runway still in the shift from linear to streaming,” said Netflix CFO Spencer Neumann. “And so for us, it’s about growing into that shift and also obviously competing well and continuously innovating and improving.”
Pay-TV services are at their lowest household penetration point since 1993, but as Neumann points out, there is still no country in the world where streaming accounts for more than 40% of total TV viewing time. While Netflix is the most-watched streamer overall, it still only makes up 8% of total time spent watching TV in markets where its household penetration is the highest. That means that Netflix certainly has more room to snag cord-cutters as they leave the pay TV marketplace.
The service will have competition for those eyes, however. Other streamers like Disney+, Prime Video, and HBO Max are also waiting in the wings to snap up more viewers, so what can Netflix do to ensure that it’s the first stop for users looking for a new entertainment outlet?
Netflix’s new ad-supported tier is a good place to start. The service is obviously not unique in offering ad-supported streaming, as most major services now provide at least one price tier with ads. But Netflix currently has one of the cheapest plans with ads on the market, at a price point of $6.99 in the U.S. and €4.99 in European countries in which it is currently available.
Another way that Netflix can bring in more global users who defect from pay TV is by continuing to diversify its content. The service’s U.S. and Canada subscriber numbers have remained pretty even over the last year, and most of its customer gains have come from abroad. Netflix’s content library increasingly reflects that user makeup and its current catalog now has more shows made outside of the United States than in it.
Related: Top Ten FAST Channels Netflix Should Consider Adding in 2023
Further growth for Netflix could also be stimulated with free ad-supported TV (FAST) channels. The company has had preliminary discussions regarding adding FAST channels, which usually provide users a more “lean-back” style of viewing that allows them to watch passively while doing other things. One industry executive has estimated that 80% of all TV watching is of the “lean-back” variety, so adding FAST channels would be a quick way for Netflix to bump its engagement numbers even higher.
Things may look rosy for Netflix these days — especially to where they were in early 2022 — but the company isn’t resting on its laurels. Executives still see plenty of room to expand engagement and have several avenues they can pursue in order to do just that.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.