Investing.com -- BusinessInsider reported that Netflix (NASDAQ:NFLX) is exploring video podcasting. According to Bernstein analysts, the move aligns with its broader strategy to expand its total addressable market (TAM) and boost user engagement.
“Penetration is nearing saturation in some markets, and consumption per person has remained steady at roughly 60 minutes per day in recent years. To sustain growth, Netflix needs to expand its TAM and drive higher engagement,” Bernstein wrote.
While Bernstein believes international markets still offer room for subscriber growth, they believe Netflix is looking for new ways to sustain long-term expansion.
The company’s recent foray into live events and sports, such as partnerships with WWE, NFL, and Formula 1 discussions, is part of this strategy, and adding podcasts could further strengthen its value proposition, according to the firm.
The podcast market is sizable, with over 500 million listeners globally and growing at a high single-digit (HSD) rate, according to Bernstein.
“More than 40% of US adults with internet access listen to podcasts, with the average listener spending over seven hours per week,” the analysts stated.
Bernstein adds that the listening time is roughly equal to what an average Netflix user spends on the platform, making it a potentially lucrative area for expansion.
Although Apple (NASDAQ:AAPL) and Spotify (NYSE:SPOT) dominate podcast consumption, Bernstein emphasizes that Netflix doesn’t need to win the category. Instead, they believe its goal is to diversify its content and create a broader entertainment ecosystem.
“At the end of the day, it’s about ROI,” comments Bernstein. “Adding another content category—one that could reach more subscribers and increase engagement—would help drive ROI,” Bernstein stated.