A new wave of content might be just what Netflix Inc. needs to revive sales after a pandemic bump turned into a slump.

Few tech companies prospered more than Netflix
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over the first 12 months of the COVID-19 pandemic, when consumers were homebound. But as the lockdown continued and content dried up, rivals Walt Disney Co.
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Apple Inc.
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and AT&T Inc.
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gained ground.

The question now is whether Netflix — the market leader with more than 200 million paid subscribers — can reassert its dominance. Expectations are muted for Tuesday, when the streaming service is scheduled to announce second-quarter results, but analysts are looking for more information on when popular series are returning later in the year for signs of a big rebound.

Truist Securities analyst Matthew Thornton expects the content slate to improve in the third quarter with shows like “Fear Street” and “Money Heist” and hit its stride in the fourth quarter with “Cobra Kai,” “The Witcher” and movies like Dwayne Johnson’s “Red Notice,” before new seasons of “Stranger Things,” “Ozark,” “The Crown” and “Bridgerton” hit in 2022.

“Netflix remains the most used service, and we believe its breadth of originals supports long-term pricing power,” KeyBanc Capital Markets analyst Justin Patterson said in a note to investors July 12.

See also: Game on? Netflix hires first videogame executive, signaling a new approach

Netflix will need every bit of its content to reverse an expected downturn of net paid additions in the first half. Analysts polled by FactSet expect just 1.15 million net additions in the second quarter, down from nearly 4 million in the previous quarter, after Netflix predicted it would be its worst quarter for streaming growth in history while missing first-quarter expectations.

At the time, Netflix executives blamed slowing paid membership growth on “a lighter content slate in the first half of this year, due to COVID-19 production delays.” Analysts expect the second half will improve — current projections according to FactSet are for 5.5 million new subscribers in the third quarter and 9.64 million in the final three months of the year, as fresh new series and movies bring back consumers who have churned through the streaming service.

To ply the pump, Netflix recently signed content deals with Hollywood legend Steven Spielberg and TV icon Shonda Rhimes, the creator/head writer/executive producer of Netflix’s popular original series “Bridgerton,” as well as ABC’s “Grey’s Anatomy,” its spinoff “Private Practice,” and the political thriller “Scandal.”

For more: Netflix signs ‘Bridgerton’ producer Shonda Rhimes to exclusive new deal

Original content is sizzling across streaming services that are trying to rival Netflix. Disney+ triumphantly debuted “Black Widow” to $60 million in streaming revenue on opening weekend by charging subscribers $30 to watch the first Marvel movie to premiere on the streaming service. (The movie earned $80 million in domestic box office sales and $78 million internationally.)

AT&T’s HBO Max has ratcheted up the pressure, with recent releases like “In the Heights.” “Space Jam: A New Legacy” streaming the same day they hit theaters. Apple TV+ signed “Lovecraft Country” creator Misha Green to develop new TV projects. The platform continues to emphasis prestige productions such as “Ted Lasso” and “The Morning Show,” and reached an agreement with Oscar-winning director Martin Scorsese that will bring “Killers of the Flower Moon,” starring Leonardo DiCaprio and Robert De Niro, to Apple TV+.

What’s worth streaming in July: ‘Ted Lasso,’ the Tokyo Olympics and more

Amazon.com Inc.
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which has bid $8.5 billion to acquire movie studio MGM, also signed a deal to offer Universal content after it plays on Comcast Corp.’s
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Peacock. Even beleaguered Peacock, derided for a dearth of content, has exclusive rights to the Summer Olympics, Tour de France and the Premier League.

Netflix might also expand into gaming after it hired former Mike Verdu, a former executive at Facebook Inc.
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and Electronic Arts Inc.
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as vice president of game development. Netflix is expected to make games available on its streaming service within a year, according to Bloomberg News, but expect executives to provide a bit more information about their plans there when they address investors Tuesday afternoon.

What to expect

Earnings: Analysts on average expect Netflix to report earnings of $3.18 a share, up from $1.59 a share a year ago. Analysts were projecting $2.70 a share at the end of March.

Contributors to Estimize — a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others — are even more optimistic, projecting earnings of $3.18 a share on average.

Revenue: Analysts on average expect Netflix to report $7.32 billion in second-quarter revenue. Estimize contributors predict $7.32 billion on average.

Stock movement: Netflix’s stock is flat so far this year, while the S&P 500 index SPX has increased 16%.

What analysts are saying

Like most Netflix analysts, Stifel’s Scott Devitt anticipates a second-half resurgence after a dearth of new content through the first six months of 2021.

“Netflix expects over $17 billion of cash content spend in 2021, with spending expected to increase in 2H,” Devitt, who has a buy rating and $560 price target on the stock, said in a July 14 note. “Our model calls for accelerating paid net subscriber additions in 2H as the company moves towards a strong content slate” featuring series like “Sex Education” and “The Witcher,” as well as movies that include “Red Notice” and “Don’t Look Up.”

With streaming services opening the spigot on productions, and Netflix promising more than 70 movies this year, analysts like Cowen’s John Blackledge expect Netflix’s engagement with consumers to remain high. He maintained an outperform rating and price target of $650 a share in a June 30 note to clients.

Read: Only two companies had more Emmy nominations than Netflix

Netflix is still considered the king of content among video platforms despite ballooning investments by Disney, Apple, and HBO Max, according to Cowen’s survey of 2,500 U.S. consumers. Netflix commanded 28% of the vote, far ahead of Google’s
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YouTube (15%), basic cable (10%), and Amazon Prime Video (9%).

“We think Netflix is well-positioned as the first choice to stream movies and TV shows online, while the company continues to ramp Originals & increase the value prop of the service,” Blackledge wrote.

JPMorgan analyst Doug Anmuth believes Netflix could have its “strongest six-month content slate ever,” helping it gain inroads in international markets. He suggests net paid additions of 2 million, based on data through June 10, and has modeled for 14.25 million net adds in the second half of the year — 5.25 million in Q3, and 9 million in Q4.

Anmuth, who reiterated an overweight rating and price target of $600 in a July 9 note to investors, is “bullish” on series “The Kissing Booth,” “Money Heist,” “Sex Education,” “The Witcher,” and “You.” He’s also big on movies “Red Notice” and “Don’t Look Up.”

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