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On Wednesday, Netflix will announce its second-quarter earnings, the first in a string of disclosures by entertainment corporations that have drawn the ire of Hollywood writers and actresses on strike.
Analysts anticipate that Netflix will have good news to share. There hasn’t been any opposition to the company’s assault on password sharing. The new advertising tier that Netflix launched in November is anticipated to begin generating respectable returns. And despite increased competition, total subscriber turnover has remained low.
“If there is a winner in this, and I think economically in terms of real value, I think really there is only one winner—that is Netflix,” said Barry Diller, a seasoned media executive. It doesn’t imply that all of these other businesses will lose. It simply indicates that the business models of these competing companies are less successful.
In the upcoming weeks, Comcast, Warner Bros. Discovery, Paramount Global, and Disney will all release their earnings reports. However, Netflix’s perceptions are particularly convoluted.
The majority of the criticism levelled at the strike has been directed at Netflix, particularly from writers who claim that the streaming economy has negatively impacted their working conditions and overall income. Last month, when shareholders voted to reject generous compensation packages for the company’s senior executives, the company already had to deal with irate shareholders. A positive earnings report can enrage people who are protesting.
The question-and-answer session with Netflix’s top executives will be conducted by Bank of America analyst Jessica Reif Ehrlich. “The guilds will be listening to every word they say and will use it against them,” she said. “In actuality, they are in charge of a sizable company. Naturally, I will inquire about the strikes, but they are also engaged in other activities, such as password sharing, which is unrelated to the strike. I just don’t know how cautious or precisely worded they will be given the guilds’ possible response.
The strike has already brought some advantages to the business. Netflix said last month that it will be obtaining the rights to many HBO original series, including “Insecure,” “Band of Brothers,” “The Pacific,” “Six Feet Under,” and Ballers,” from WarnerMedia.
On Wednesday morning, Netflix revealed that it had discontinued its $9.99, ad-free “Basic” plan in the US and UK. Customers who have this subscription can continue with it, but new customers must select either the $6.99 ad-supported plan or one of the two ad-free choices for $15.49 for “Standard” or $19.99 for “Premium.”
In contrast to conventional entertainment corporations, whose stock prices have fallen since the writers’ strike started in May, Netflix shares have risen around 39%, reaching $474.80 at Tuesday’s market closing.
In addition to the strong returns generated by Netflix’s new subscriber programmes, the business is anticipated to record advantages from lower operating expenses related to productions that were halted during the writers’ strike. A number of well-known shows, including “Big Mouth,” “Cobra Kai,” and “Stranger Things,” were supposed to be in production but were instead cancelled. In the case of “Stranger Things,” the show’s creators, Matt and Ross Duffer, decided to halt production because they were unable to write while on location.
They stated on Twitter around the beginning of May that “writing doesn’t stop when filming begins.”
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