Netflix with ads? How, when and why – Technology

Netflix is ​​changing its business model. What is not an actual shock considering what the real shock was: a statement about it lost subscribers for the first time in ten years (there were 200 thousand in particular) and what are you waiting for will lose another 2 million in the next quarter.

The news fell like a bomb on the market and led stock price plummeted (affect 35%!)which was the company’s biggest stock market drop since 2004. Translation: it lost $ 50 billion in value.

Add following text: The announcement and the crash left investors in such tears that, for example, Pershing Square, an investment fund, sold its stake (3 million shares) at a loss. Rationale: “We have lost confidence in our ability to predict the company’s future prospects.”

Therefore, as explained in the minutes, changes are coming. In other words, this means there must be ads. And there are 9 billion reasons for that (let’s go). But in parts.

what next

The protocol begins with an important note: Netflix does not force anyone to watch ads. Instead, you should create a new, cheaper plan that includes ads. In other words, existing subscribers must be able to continue to enjoy the service as always: ad free.

  • What the CEO said about the subject: “If you want an ad-free alternative, as a consumer, you have a choice,” Reed Hastings corrected in his earnings call for the first quarter of 2022.[Mas] if you want to pay cheaper and tolerate ads, we’ll take you into account, ”he said.

This solution is not new to the market. In fact, it’s not just new, it’s even more or less tested. Just look at the service numbers streaming Hulu (of which Disney has about 67%, as it is already known to have the remaining 33% in 2024).

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  • From Hulu’s 35.4 million subscribers in 2020 to 40.9 million in 2021. And you only have a choice ad free since 2015. (Before that there was an option … see the ad first and then the series.)
  • Hulu’s average monthly revenue per subscriber was $ 12.96 – which is roughly the same price as Netflix’s monthly subscription (in the United States).
  • In other words: Hulu can make money from both a subscriber who is willing to see ads and a subscriber who is willing to pay more so he or she doesn’t have to see them.
  • Other information to help explain the phenomenon: The service (with ads) costs only $ 6.99 per month, and you can often participate in campaigns that cost $ 2.99. This, in addition to the possibility of joining Hulu through packages (bundles) cheaper (as the most famous packaging From Disney, which included Hulu, Disney + and ESPN +, for $ 14 a month).

On Netflix, it is not yet

The minutes emphasize that notifications are coming, but not now. The platform thoroughly tests all changes (such as buttons) and is known not to give up. In this case, however, the situation is different. And it’s different because it’s proven to work.

  • “I don’t think we have much doubt that it works,” Hastings explained. “Other companies [Hulu, Disney e HBO] figured out how to do it. I’m sure we’ll do it instead of testing it, ”he said.
  • In briefIt is not yet known exactly what service Netflix ‘s ads will have, but we know the company will be working on it in the near future.

Give up on ads

After reaching a standstill in the North American market, Netflix naturally turned its attention to the international market. The reality, however, is that the company has difficulty consolidating its position in many countries, often because it is unable to match the lower prices of its competitors (local and regular direct competitors such as HBO or Prime Video).

  • Problem: The machine must continue to grow and generate money to feed the hunger of investors.
  • Solution a): This is where the ads come in. Experts estimate that Netflix will lose $ 9 billion in revenue by going into the game without looking for that revenue.
  • Solution b): attack on password sharing. Reason? The platform will lose $ 1.6 billion a year for this reason. And therefore, in addition to the announcements, Protocol warns that movements in this direction are expected in the near future.

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