Rebecca Day

Pivotal Research Group raised Netflix to a “buy” from “sell,” analyst Jeffrey Wlodarczak wrote investors Wednesday. PRG increased its subscriber forecast from 5.5 million to 15 million on what it believes will be a successful conversion of “effective pirates” to paying subscribers, plus short-term subscriber benefits of launching its ad-supported service next week. Wlodarczak is concerned about “consumer churn” down to $7 ad-supported tiers, “particularly in a recession,” though that isn’t likely to be an issue until second-half 2023, he said. The analyst views competitor price hikes as “fundamentally positive.” Despite growing competition in the streaming video space, Netflix “provides the most unique and powerful streaming experience globally” and has the opportunity to accelerate subscriber growth over the next year, he said. Wlodarczak expects co-CEO Reed Hastings to “look to sell” the streaming service as early as 2024.

Recent Apple and YouTube Premium price increase announcements are “really good for us,” said Spotify CEO Daniel Ek on the company’s Q3 earnings call Tuesday. Saying Spotify has the “lowest churn of any competitor,” Ek said, “we would likely fare better” with price hikes, citing the streaming audio service’s “significant pricing power.”

Shipping volume will peak later in December vs. 2021 as consumers return more to pre-COVID-19 pandemic “shopping behaviors,” said UPS CEO Carol Tome on a Tuesday earnings call. Q3 revenue grew 4.2% to $24.2 billion: U.S. revenue grew 8.2% on a 9.8% increase in revenue per piece.

Logitech sales dropped 12% in Q2 FY ’23, 7% in constant currency, to $1.15 billion, reflecting a “challenging macroeconomic environment," the company reported Monday. Operating income dropped 29% year on year to $127 million for the quarter ended Sept. 30.

After “massive growth" in adoption of residential internet during the COVID-19 pandemic, U.S. broadband growth slowed in 2022 as the “low-hanging fruit has already been picked,” said Parks Associates analyst Kristen Hanich on a Connections webcast last week. Broadband penetration increased 5 percentage points -- 12 million homes -- since 2019, when pandemic-driven shifts required workers and students to work from home.

Amazon’s Q3 revenue could fall at the low end of guidance due to currency translation and macroeconomic challenges, when the company reports earnings Thursday, Wedbush analyst Michael Pachter wrote investors Monday. Amazon's guidance on its July earnings call was for revenue of $125 billion-$130 billion, including about $5.2 billion of negative impact from foreign currency exchange rates. The dollar strengthened in the quarter, “likely causing a more substantial headwind than management expected,” which Wedbush believes could take foreign currency translation losses above $1 billion for the quarter. The analyst expects about $4.5 billion in additional revenue from the July Prime Day event, though that could be dampened by currency exchange impact and macroeconomic challenges. Amazon’s Prime subscription hike -- from $119 to $139 annually, or $12.99 to $14.99 monthly -- is expected to add $500 million in subscription revenue growth for Q3, while Wedbush expects Amazon Web Services to post $1 billion growth. Looking to Q4, the stronger dollar could have a favorable impact on import pricing, and high employment will keep consumer discretionary spending strong into the holiday season, Pachter predicted, offsetting negative impacts. Wedbush expects Amazon to give Q4 sequential revenue growth guidance in the “mid- to high-teens,” vs. the typical rate of 20% or more.

AV receiver shortages that plagued the custom installation channel have started to ease, but supply chain issues remain for processors and control products, Home Theater Specialists of America Executive Director Jon Robbins told us last week. “It depends on the category,” Robbins said of supply: “There are some categories that were challenged 60, 90, 120 days ago that are not nearly as challenged as they were." AVRs “were critical,” he said, and the category is “flat to slightly up” for the year, he said.

The Cyber Five shopping days -- Thanksgiving through Cyber Monday -- are still tentpole holiday season sales days, but early shopping events in October are eroding their share, said eMarketer analyst Andrew Lipsman on a holiday season trends webinar Thursday. 2022 was the third year of October deals events -- with Walmart and Target joining Amazon in kicking off the holiday season before Halloween -- and “it’s starting to become entrenched with the consumer," Lipsman said.

Video streaming reached a “turning point” in Q2, said Scott Maddux, TiVo vice president-content strategy and business, on a webcast last week, noting the number of video streaming services consumers watch now averages 9.9. “That’s a lot of services to navigate,” Maddux said. “The burden on the consumer is getting pretty heavy in terms of remembering where their shows are and how to find the next big thing."

U.S. holiday spending will reach $1.3 trillion during November-December, said eMarketer analyst Andrew Lipsman on a Thursday webinar on holiday shopping trends. Holiday sales will “maintain high growth” at 7% year on year, but dollars won’t stretch as far, Lipsman said.