Netflix Is Doing What?!

Netflix Executives Said On A Tuesday Call Discussing Its Q1 2022 Earnings That The Firm Would Begin Looking Into Ways To Bring Advertising To Its Platform.

After losing members for the first time in over a decade, the firm is reversing its long-held anti-advertising stance. Now that Netflix is facing strong revenue growth headwinds and its stock has dropped over 30% since its April 19 results announcement, it may finally open itself up to advertising.

Netflix Reverses Its Anti-Ad Stance.

If you're a patron of Netflix, you're probably well aware of the absence of ads on your content. This has been the case since the inception of the company, which is in favor of the subscription-based model it's had since launching its streaming-based service. Other streaming services, however, are not a stranger to the Ad-based model, especially for free users or bottom-tier subscription holders, as seen on Hulu or Amazon Prime Video. Netflix's Co-CEO, Reed Hastings, states, "Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription, but as much I’m a fan of that, I’m a bigger fan of consumer choice." Even though this core change at Netflix seems out of character, it makes sense with how the company has been performing as of late.

Under-performing.

Since the company's April 19 earnings announcement, its shares have dropped over 30%. Along with the stock drop, the company has reported that it lost subscribers, for the first time in a decade. Netflix is also no stranger to controversies either, there's a Wiki Page that's been keeping close tabs on that, here.

With the market becoming much more competitive, Netflix needs to shed its old business model and move forward with the evolving market if it doesn't want its lunch money taken by its competition.

What To Expect.

Netflix will not force anyone to watch advertisements. The company will introduce a new, lower-cost service plan that includes advertising, but will continue to offer ad-free plans to existing customers. Ads are on their way, but it may take some time. Netflix is well-known for trialing, testing, and fine-tuning features on its service, and the company frequently A/B-tests features that do not make the final product. Expect similar ad tests to be conducted in the future, as the company appears to have made its decision. Notably, the new offering will not be available for a while as the company considers the best course of action 'over the next year or two.' Netflix COO Greg Peters, on the other hand, has stated that advertising is a "exciting opportunity for us."

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Sources:

Mangioni, S., 2022. Netflix Plans to Introduce Cheaper Ad-Supported Plans to Draw in More Subscribers. [online] https://manofmany.com/. Available at: <https://manofmany.com/entertainment/movies-tv/netflix-cheaper-ad-supported-plans> [Accessed 17 May 2022].