Posted on: September 6, 2022, 10:56 a.m.
Last update on: September 6, 2022, 12:11 p.m.
In order to stem its financial haemorrhage, netflix is preparing a new business model that includes advertisements. But, when the streaming platform introduces its new ad-supported tier, it likely won’t have any gaming, political, or cryptocurrency ads.
The scheduled launch date for Netflix’The ad-supported model was going to be in early 2023. However, it moved it up in order to compete with Disney+. The latter will launch its own ad-supported plan on December 8.
New netflix The subscription plan will be available from November 1 in various countries including Australia, US, Canada, UK, Germany and France. netflix will stagger rollouts, but the platform that once boasted being completely ad-free will no longer exist.
Become a myth without advertising
The introduction of the ad-supported tier is a means to an end. netflix is looking for ways to attract new customers and hopes that offering a plan at a lower price will help.
Initial reports indicate that the new tier will cost around $7-9 per month. Those who don’t want ads will have to keep paying more.
The decision to exclude certain types of advertisements is not due to an altruistic or moral reason. Instead, it’s because these industries face more regulatory ambiguity than others.
Most companies have canceled these types of ads due to lack of regulation. Facebook banned sports betting and crypto ads before allowing them in certain regions for the past two years.
In 2019, Alphabet, the parent company of Google, lifted the ban on sports betting ads in some jurisdictions like the United States. Two years later, it began allowing cryptocurrency-related advertisements, allowing exchanges and wallet providers to promote their services on the search engine.
However, this move did not always go well. Last month, Italy fined Google 1.45 million euros ($1.47 million) after showing gambling ads on YouTube. This was after the company reportedly reinstated a ban on the content.
Due to different views on certain types of ads, netflix take a hands-off approach to certain industries. Even with the ad-supported tier, the platform is said to be flexible. It would consider not including commercials in its original content or during some children’s shows.
Consumers lose interest netflix Doesn’t
Advertising is one of the biggest money makers and how many streaming platforms make money. However, netflix tried for years to avoid going the ad-supported route.
Two years ago, co-founder, president and CEO Reed Hastings bragged about by Netflix position without advertising. He claimed it was the “best capitalism”, adding that making money from advertising is hard work.
As recently as January, he continued to repeat the company’s opposition to the ads. In March, however, his position began to change. Hastings then claimed in April that an ad-supported tier made sense because it gave consumers options.
During the first quarter of the year, the company lost 200,000 subscribers. It was when netflix realized he needed to find a new way to make money. When he lost another 970K in the second quarter, he knew he was in trouble.
The decline in subscribers has not significantly reduced its revenue, although there is no ad-supported tier or ads in place. Company data compiled by Macrotrends shows annual revenue of $20.15 billion in 2019, a 27% increase from the previous year. Last year it was $29.69 billion.
In the second quarter of this year, Netflix’s revenue was $7.97 billion, an increase of 8.56% year-on-year. Thus, the company is always in the right direction. His net income also increased. From 2018 to 2019, it jumped 54%; from 2019 to 2020, it exploded by 85.58%.
Netflix continues to make money, posting a net profit of $1.44 billion for the second quarter of the year. This is an increase of 6.5% over last year.