Netflix stock (NFLX) has surged 50% since the start of 2024, with shares trading near their highest levels in a year. Despite this impressive run, the streaming giant’s biggest test lies ahead: sustaining high and consistent viewership.
In its latest biannual report, Netflix revealed that subscribers watched over 94 billion hours from January to June, a 1% increase from the same period in 2023. This slight uptick in engagement comes even after the company added over 39 million subscribers, thanks to its password-sharing crackdown and a cheaper ad-supported tier.
While Netflix has maintained a strong subscriber base, average daily viewing per user has declined. The platform saw daily viewing hours drop 13% year over year, from 2.1 to 1.9 hours in 2024. This stagnation in engagement poses a risk, as analysts suggest Netflix may struggle to raise subscription prices without losing viewers, especially with subscriber churn on the rise.
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Subscriber churn across all streaming services was 5.2% in August 2024, up from 4.7% a year ago. Netflix’s churn rate increased to 2%, signaling that price hikes and the removal of its “Basic” plan for U.S. consumers may have contributed to cancellations.
Netflix remains confident in its dominance, citing healthy engagement and leadership in overall TV viewing, per the Nielsen Gauge report. However, concerns loom over whether it can keep its engagement levels high and continue to grow its ad-supported business, especially as consumers become more selective with their streaming budgets.
As Netflix prepares to report Q3 earnings on October 17, Wall Street expects nearly 15% revenue growth and a 40% year-over-year surge in earnings. For 2024, analysts project a 60% rise in earnings and total revenue of $38.73 billion, marking a 15% annual increase. But without sustained viewership growth, Netflix may find it difficult to meet these high expectations.
