Netflix is ​​different now—and there’s no turning back

For about a decade, Netflix never seemed to stop growing. The company has become synonymous with the idea of ​​streaming: cozy nights in and binge-watching shows, setting a high standard for the rest of the industry. The company posted a market cap that peaked at more than $300 billion in 2021 as subscriber numbers continue to soar and original content piles up.

But when Companies start losing subscribers In 2022, everything changes. Netflix has to make changes quickly if it wants to keep investors happy.That year, the Netflix co-founder did something Reed Hastings gets back-to-back rejections: It launched cheaper, advertising support layer The goal is to attract new subscribers while making money from advertisers.

although slow startNetflix’s ad-supported tier Gained 5 million subscribers In just six months. The plan is now one of Netflix’s most popular, and its latest earnings report showed that 40% of new subscribers chose the cheaper option. Netflix is ​​just continuing to work on that plan; Added 1080p video and the ability to watch two streams simultaneously. But the company’s plans to reverse its dwindling user base don’t end there.

“Netflix is ​​very clear that they are one of the few must-have streaming brands for many households.”

Streamer goes one step further Crack down on password sharingNetflix is ​​now notorious for embracing this A tweet from 2017The move did little to boost morale among the subscriber base Frequent price increases, however, it still seems to be working in Netflix’s favor.Shortly after the crackdown began, Netflix said pay-to-share led to There are more people signing up than canceling It also brings higher income.

Netflix keeps pushing the envelope Prices increased again last fall (Third time in three years). stop letting go Subscribers can sign up for the cheapest ad-free plan at $11.99 per month. now getting rid of Targeted entirely at those who have already signed up, the plan attempts to push users toward either the $6.99 per month ad-supported plan or the $15.49 per month standard package.

While it may seem counterintuitive to direct users to the cheapest tier, advertising is now an important part of Netflix’s business.

Last year, the company said Revenue per customer has increased Netflix’s ad-supported plan, rather than the $15.49 ad-free plan, means the $11.99-per-month basic plan probably won’t do much for Netflix’s bottom line. On an earnings call this week, co-CEO Greg Peters said the company’s top priority for the ad business is “scale.” For Netflix, this means “making ad programs more attractive” and “changing our plans and pricing structure and other places we see fit.”

Then there’s Netflix WWE deal worth $5 billion Monday night birthday. Sources told CNBC Netflix will not show ads during this time raw If true, users of Netflix’s $6.99 plan will still see ads during three-hour shows, creating another revenue driver for the streaming company.

Paul Erickson, founder and principal of Erickson Strategy & Insights, said: “WWE content is geared toward a younger demographic, allowing Netflix to reach a portion of a larger audience that it wouldn’t be able to reach simply through lower prices.” edge“Compared to their other recent move of eliminating the lowest-priced ad-free package, I would say they are looking, like the rest of the industry… to increase their profits.”

and Monday night birthday Not the traditional kind of sports broadcasting — it’s “sports entertainment,” as Netflix co-CEO Ted Sarandos said on the company’s last earnings call. Erickson said this is an advantage for Netflix because it increases engagement and means “people” Erickson also noted that unlike traditional sports, WWE is not seasonal, so Netflix can sign up The show continues to air for its entire 10 years, and users interested in watching it will stay subscribed without an offseason break, which could result in cancellation.

All of these changes add up to a completely different Netflix than we saw just a few years ago. Netflix isn’t shy about hiding what it’s doing, either, in part because cannot After years of fighting for subscribers, streaming services are now Need to prove they are actually profitableThis has led to streaming companies (not just Netflix) raising prices and consolidating their services into a single app, such as Max and Disney Plus with Hulu. – a streaming brand for many households,” Erickson said. “They need to keep this title as a must-subscribe service even in the face of stiff competition.”

Netflix is ​​no longer synonymous with streaming, in part because it’s no longer the only game in town. But even Netflix today is a far cry from what it once was, and it’s bound to continue to drift further away from its original vision. Rising stock prices boosted streaming ideals, only to come back to reality. As for what the future means for streaming — whether it will soon become a hybrid of live and on-demand content with advertising — one thing is clear: Netflix’s rapid growth has allowed the company to compete in an industry that’s more competitive than ever Stay ahead of the curve and there’s no turning back.

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