For market challengers and incumbent leaders, every subscriber and every dollar counts.
With 5.1m new paid subscribers, over $9.8bn in revenues and 35% growth in ad-tier membership reported in Q3 2024, Netflix continues to lead with profitability amid growing competition and significant shifts in the streaming subscription economy. The latest quarterly figures reflect a wider story around the streaming industry’s pivot in focus. While subscriber growth remains a critical objective for all major services, a push for data-driven customer relationships and deeper engagement across multiple subscription tiers is coming to the fore – not just temporary boosts in subscriber count, but delivering long-term value. Let’s take a closer look at what’s new and what comes next in streaming profitability.
Driving engagement in a hybrid future
From its first quarterly earnings report next year, Netflix will move away from disclosing subscriber growth metrics and average revenue per member, focusing instead on user engagement and profitability. As some markets approach saturation and the business broadens its offering with more diverse service tiers, price points and revenue models, this shift in reporting focus makes sense, not least because wider research points to slowing streaming subscription revenue growth – PwC finds average revenue per subscriber will barely increase over the next few years, rising from $65 in 2023 to $67 in 2028.
All leading streaming businesses are diversifying their revenue strategies beyond premium subscriptions to power new advertising incomes, or more flexible monetisation models to drive ROI on live sports investment. With 50% of Netflix’s Q3 2024 sign-ups coming from cheaper, ad-supported plans, a combination of low churn rates, increased viewing time and a fast-growing audience should prove effective in building long-term advertising revenues.
Championing hybrid monetisation with a comprehensive, tailored mix of subscription options is essential for maximising revenue. Deloitte forecasts that the number of SVOD tiers offered by top providers will increase from an average of four in 2023 to eight this year. What’s more important is making sure those packages are customised to cater to regional nuances, diverse tastes, price points and payment preferences.
And sometimes, less is more. Cultivating a healthy subscriber relationship starts right from the sign-up stage. Making life easy for subscribers with intuitive onboarding and personalised offers helps bring customers onto your service quickly.
Simple fixes for long-term growth
I talk with business and engineering leaders from streaming companies every day, many of them in the MENA region. Shahid, for example, has championed local content and a powerful multimarket growth strategy with regionally tailored, multi-currency pricing and payment options to increase customer acquisition by 75% and overtake Netflix as the regional market leader. Yet there are revenue gaps across subscriber interactions that impact the bottom line.
Besides affordable ad-supported tiers and password-sharing measures, streamers employ under-the-hood techniques to improve subscriber growth and retention. Behavioural analytics are helping predict potential subscriber cancellation and address it before it happens. Market innovators are using advanced analytics and AI to tackle all flavours of churn through intelligent payment retries, personalised offers or user-centric pause-and-resume capabilities.
Looking ahead, more media companies will push for personalised, value-added subscription offerings, whether through content and digital service bundling, compelling live sports propositions or ultra-tailored pricing options that subscribers simply can’t refuse.
Lalita Tadikonda is SVP of Corporate Strategy & Business Development at Evergent
