A New Ad-Based Tier Won’t Fix What Ails Netflix
from the must...drive...quarterly-growth dept
As a publicly traded company, it’s simply not good enough to provide an affordable service that people genuinely like. The pressure to deliver quarter over quarter growth often takes on a tendency toward auto-cannibalism; price hikes, customer support cuts, dumb ideas justified through greed, all designed to goose growth, but often at the cost of brand reputation and service quality.
That’s the metamorphosis currently underway at Netflix. After years of explosive growth, the company lost nearly a million subscribers between April and July. In part due to new competition in streaming, but also because Netflix executives are stuck in this auto-cannibalism loop; sacrificing what’s popular about the service (affordability, no ads, few weird restrictions, decent content) to feed Wall Street’s insatiable maw.
After years of affordable rates and no ads, Netflix has been raising prices. On the flip side, they will soon provide users with an ad-based tier. It’s estimated to be around $7 to $9, and will feature around four minutes of advertising each hour, a metric that will inevitably sneak skyward as Wall Street demands it:
Sources told Bloomberg that this ad-supported tier will feature four minutes of commercials per hour (I can’t wait for eight minutes of commercials during the next Stranger Things finale). Also, the company is expected to run ads before and during programs, but not after. A timeline for the rollout is unclear, but Bloomberg says that the tier will first be released in “at least a half dozen” markets in the last three months of 2022 with a larger release in 2023.
An ad based tier might goose subscription numbers on the short term, but it’s not going to cure what’s causing broader defections. Customers are leaving for competitors because Netflix’s catalog quality has deteriorated, the price for the service has gone up, and the company’s increasingly looking to nickel-and-dime its subscribers in a way that’s reminiscent of traditional cable.
It’s most apparent with the company’s dumb crackdown on password sharing. For years, Netflix made it very clear that password sharing wasn’t just good, free advertising, but something it encouraged:
But now that it’s struggling to meet Wall Street’s insatiable appetite, the company has started framing password sharing as some kind of massive drain on the company, and will soon nickel-and-dime users with extra fees if they share the password outside of the house.
But Netflix already limits the number of concurrent streams per account, making you pay more money for a higher tier if you want to have multiple people streaming simultaneously. Between this and generic, repeated price hikes, Netflix had already more than compensated for the cost of password sharing. Which is to say the password sharing crackdown is really just a transparent effort to nickel-and-dime users.
Many still think Netflix is a value (the standard tier is $10, the Basic plan is $15.50, and a Premium subscription is $20 a month). But with growth stalled and most innovation in the rear view mirror, Netflix is now on a familiar path toward both nickel-and-dimey turf protection, and forgetting the traits that made the service so popular in the first place.
Filed Under: ads, password sharing, price hikes, streaming, tv, video
Companies: netflix
Comments on “A New Ad-Based Tier Won’t Fix What Ails Netflix”
wtf
so they raised prices only to put the original price back in, at ad supported? Wow, that’s pretty blatant greed right there.
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Disney+ is doing it worse. After publicly pledging to provide a cheaper ad supported tier, Disney has announced a price hike so the ad supported tier they pledged to offer is the old basic price. You know, the one that was slightly too expensive resulting in people asking for a cheaper, ad supported tier that Disney pledged to provide.
What ails Netflix is...
Crap content, and lousy marketing.
Most of what Netflix spews out should be straight to cable or straight to video. That is B and C tier content.
Netflix will spend big bucks for big name actors, who are maybe on the downward slide, but won’t take the time or money to nurture a script, and engage in the development process to produce top tier product.
I can’t find anything to watch on Netflix. I have to go to some other site, that has indexed the offerings for me to find content I actually want to see. Netflix’s “suggestions” are a poor substitute for a indexed list.
How many movies and series are available at one time? Who knows? I don’t.
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To be fair, a lot of what the major movie studios used to release in theaters between all the big blockbusters was B- and C-tier content. Now that those movies can be offloaded to streaming services, of course it seems like that’s all those services get.
Also imporant to note: Movies that bombed at the box office sometimes found new life thanks to cable/home video releases. The Shawshank Redemption was saved by being aired repeatedly on Turner-owned networks for years; what once was a box office bomb now has a reputation as one of the greatest films ever made.
None of that excuses all the cheap-ass reality TV trash on Netflix, though. Swinging for the fences with a B-movie and missing wildly is one thing; skimping on renewing mildly successful shows because they’re a bit too expensive compared to a show about installing sex dungeons in homes is some flat-out bullshit.
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What’s wrong with sex dungeons?
I’d say their problem is quite the opposite though. Netflix was long a good source for mid-level B, C, and Z material
But we’ve watched them all.
Now they focus on targeting small populations of content type consumption that makes the Wall Street people happy. Rather than, what independent and art-house fans like, we get big money “independent crap that fits a political or social narrative that makes some investor happy.
Gone are the Tinto Brass, the NFEx, Japanese gore. Gone is politically unacceptable content, eg Russia. Gone is anything that doesn’t fit one of the very narrow politically defined from on high investment programs.
Netflix, in trying to compete with mainstream, is quickly pushing off the subscribers that make them money.
Because mainstream will sign up for a free account, pay for one more month, and disappear till the next blockbuster shows up.
I was a DVD subscriber since the pay-per-disc days. I finally!gave up on it a few years ago. When the only new discs each month topped theatre charts.
With the likes of Arrow, Shout, Scream, etc now having their own, half the cost or less, services, Netflix is loosing the core film fans and replacing them with fickle pop-culture-consumers.
At this rate, as I mentioned some months back, Netflix is nearly putting themselves in the spot where they could only survive as just-another-channel on prime video. Over 400 indi films came out in august, from this country alone. 3 made it to Netflix.
Most made it one way or another to Amazon.
It’s now difficult to find something I haven seen that I’d actually want to watch.
There’s a flood of original customers now leaving. 20 a month for three films is a bit hard on the wallet. There’s still older content keeping me around, but it’s running out.
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“Gone are the Tinto Brass, the NFEx, Japanese gore”
I somehow doubt they were attracting a lot of people to use the service, so they’re not interested in licencing content that makes zero impact on their bottom line. Go and support the outlets that are offering those titles instead. Netflix is many things, but it’s never been a one-stop shop for everything you can dream of watching even if you’re the only subscriber who ever watches them.
“I was a DVD subscriber since the pay-per-disc days”
That VAST majority of Netflix subscribers never had that option in the first place, so whining about how things compared to the disc days is not only missing the reason why streaming is different (Netflix didn’t have to licence the discs, they have to licence streaming titles and the cost effectiveness of that vs buying a couple of discs is completely different), but utterly irrelevant to discussing the service on an international level.
“There’s a flood of original customers now leaving”
Well, yeah, that happens. The market has gone from Netflix being the only viable to player to dozens of services competing with each other. If competition leads people to find more value in the new services, that’s not necessarily a failure on Netflix’s part. It just means that they no longer have the benefit of being the only player in town.
“20 a month for three films is a bit hard on the wallet”
I’m always astonished at the narrow level of taste and lack of adventurousness that leads people to think there’s only 3 movies worth watching a month on there. My problem is that there’s not enough time to keep up.
I can agree with many criticisms of Netflix, but lack of content is never one I can agree with. Maybe it’s just that I pay more attention to the full catalogue available and don’t depend on what’s being pushed on the home screen?
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Netflix was long admired for its deep and varied catalogue.
They don’t have that today. Like others here, I don’t go by what they push. I can’t honestly remember EVER choosing a main-page title for my queue.
And that’s my point. Netflix has given up on the core film enthusiasts to attempt to grab mainstream audiences.
That would be fine if they didn’t abandon those who supported them since day one.
Netflix wouldn’t be a streaming powerhouse if it didn’t hold all the DVD users during the transition period. And continue to supply non-standard Farr that kept us paying $45-$55-$59.99 for 8-disc accounts.
That less common material brought over users willing to stick around when it went to streaming. Not watch a few blockbusters and cancel for 6 months.
The content issue is they are spending big money with the hopes of locking in users and not serving the loyalists that built them
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“Netflix was long admired for its deep and varied catalogue.”
Yes, and then the studios fucked them over with licencing, first by trying to demand too much than would be possible to keep them in business, then by setting up their own competition. Such is the business of licencing streams vs buying DVDs, and it’s the fault of copyright law, not Netflix
“That would be fine if they didn’t abandon those who supported them since day one.”
They didn’t abandon anyone willingly. However, if the choice is between servicing you individually with huge licencing fees and doing something that keep their business afloat, they’re going to choose the latter every time, no matter how many times you want to watch the hardcore cut of Caligula without buying a disk.
“That less common material brought over users willing to stick around when it went to streaming”
Yes, and now that they can measure their subscribers in hundreds of millions globally rather than thousands of users domestically, they service the people who pay them money. If you don’t like it, stop whining, cancel your Netflix sub and pay the people who do give you what you want.
Your main problem is that you choose to be a whiny asshole trying to change everyone else instead of being an adult and supporting people who provide the service you want. Stop being a prick.
“The content issue is they are spending big money with the hopes of locking in users”
I’d say I hope you’re not stupid enough to believe this, but many previous comments suggest you are. One thing they’v e never done is lock people in. Cancel now if you don’t want to pay, sub next month if you see something you want to watch. No matter what the fiction outlets you call news program you to believe, you are not locked in.
If your complaint is they provide exclusive content in order to retain users, I’d ask you to name a provider than does not do that. Even Tubi have started providing their own content, and they’re 100% ad supported.
Re: Re: Re:4
Definitely slipping. You show no reading comprehension. On top of that you speak as a generic user spouting misinformation. I’m a share holder. With a fairly decent, though incomplete, understanding of what’s going on.
Maverick isn’t charging tens of thousands and cash on top per stream. Per film. Nor is shudder, or scream, or shout, or Tokyo shock…
Big Hollywood does.
In order to afford a single film, Netflix cuts, failed to renew, small bulk film contracts.
You also fail to understand what a “locked in” audience is. A very old term for subscription services. A locked user is someone who signed up with the free or discounted offer and stickers around. Aka “captured”.
The blockbuster they’re dumping money on are not showing any lock. Any capture.
Nor did I complain about their own in-house content. Pointing out tubi after I myself stated they produce in-house, shows you’re not reading. Nearly all streaming platforms have in-house content.
The blockbuster drive of the current board is the very cause about what others here are complaining about with in-house content.
Shows aren getting cut because they “only” have hundreds of thousands of viewers. They get cut for funding but name rights purchases.
Big films don’t hold subscribers. It’s a simple documented fact.
Big titles bring in a short term surge, of free, non-collectible subscriptions. The vast majority are closed/cancelled within 30 days.
Ergo my point. Again. The NF board is chasing subscribers in a catastrophic money war trying to grab the same content as studio platforms. It’s burning money on an unreliable method.
The solution is to support the core of the platform. Spend the money on continuing in-house series, like others here are complaining about. Spend money on in-house films. And renew and maintain contracts with the hundreds of release companies that don’t agree over the payer.
See, as a shareholder, I’m well aware of the false numbers being reported for these title grab’s because I’m one of the 53% voting holders who voted to require retention stats for new subscription rates.
Adding a 500K new free trial subscribers after acquiring some name film means nothing if only 10 of them stick around and pay next month
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release companies that don’t agree over the payer.
That don’t gouge per play
Re: Netflix has given up on its algorithm
I’ve rated hundreds of things on Netflix. I might as well have not bothered. Right now, I have Patriot Act in my queue with a double thumbs up from me. But Netflix predicts I’ll like it 61%. Meanwhile stuff I turn off after 5 minutes has a 98% prediction.
They’re just using it to foist stuff on us that they want, and to steer us away from other stuff, regardless of whether we actually tell Netflix HEY I LIKE THIS, IT’S 100% YOU IDIOTS! At minimum, after someone rates something, stop posting the prediction, there’s no need for it, and it can only make Netflix look foolish.
Ah, i remember when you were just a baby, but you grew up so fast. Childhood, those teen years, and then you matured into a yound adult. Then, sadly, straight to cancer. Oh, you may still live a long time yet, sucking the life out of others to sustain yourself, and keep your boss happy. But that’s all you live for now, isn’t it?
Cancel Culture
I have loved so many Netflix series, but they cancel everything much too quickly. It’s like they haven’t learned about the long tail. Netflix has made it so that viewers can’t trust any of their series to continue past the first exciting season, much less end properly.
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The increasing unmarked video edits aren’t helping either.
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Or, When a 2 hour 27 minute Indian blockbuster release at 100 minutes, something is missing. Hey NF, we’re not blind!
Especially when, hey, Amazon has it on Eros. At 147 minutes!
Eros is $3.99 a month.
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I’m not sure which one you’re referring to, but the ones that I’ve looked at seem to be the full versions (for example, RRR clocks in at 185 minutes).
Anyway, this is the same problem as with Blockbuster back in the day. The solution is the same as it was then – vote with your wallet and access from places that have the full version, don’t just whine that a service aimed at a far more mainstream audience than you is catering to their larger market. It’s impressive that such a mainstream platform has any Bollywood/etc. content at all, let alone in the original language. If Netflix are going to be cutting costs, it’s probably going to be the niche products with lower viewing figures that will suffer, not the larger original productions. If this annoys you, ensure that the services catering to you remain viable.
Re: Re: Re:2
This has been the startup mantra forever though. Once a company gets bigger and goes public they totally abandon the core that made, and solely, supported them.
Netflix has had an agreement with Eros since it started streaming. The impressive aspect is that the general public is finally coming to enjoy them. I know they dumped them as a distributor in 2020 and moved to another, not stated, company.
You mention not cutting original content, yet that’s posted by others here as a problem as well. Dropping series just whenever.
They are making the same mi-stakes now that so many others have died on. When things get tough, they pander to the general public. That’s not how you maintain service numbers. According to both shareholder reports, and Neilson and Peachtree surveys, the core, 21%-17% of users, has never cancelled.
Yet that core is faltering today.
They make million+ agreements to carry some big theatre release quickly, and cut core content to pay for it. When they realise all the new (free) subscribers drop the trial before 30days they cut original content to make up for the losses.
Netflix is not Amazon. They need to take a page out of Tubi’s book! Not only do you try to keep your non-mainstream core, when things get tuff cater to them.
We pay for content even if we don’t have to. We stick with you when times are tough.
Funny, how generally free Tubi is outperforming Netflix in revenue overturn!??!
The core of a platform is what keeps it alive. Turn on the core and fail.
An Instagram crackdown on legal content got it sold. Tumblr has a tiny fraction of its 2020 user base.
Netflix is nearing a decision point. Sell out, like Shudder, and put the majority of your content on Amazon as a channel/station. Or: say screw the fickle populace and return to your financial core, like Glass/Scream/Fear did.
Like Tubi did, spending over $1mil for 12 new/original z-grade shark films for shark month. 4 of the highest viewing numbers for shark films this year included the $500,000+ in sales! for the free to watch Shark Side of the Moon.
Which has more view than the all-star The Meg!
I’ve said it again and again this year, and I’m absolutely correct. Netflix must stop pandering or they’re going to die.
Stop pandering
To a fickle public that uses tosser email to sign up for free accounts for a single film
To politicians who demand what you do and do not release
To interest groups who pounce on films they never watch
to Wall Street who doesn’t actually pay your bills.
Especially WS! Because they want nothing more than to see you sold. Your assets value being more than the company’s annual returns.
Re: Re: Re:3
All I see if a whiny little child who can’t face the fact that streaming licencing is completely different to DVD, and that he now has a wide range of competition he can now choose which he didn’t when Netflix was the only game in town.
You could have saved a hell of a lot of words and effort by being a grown up, yet as usual here we are with the whining and the persecution complex and the inability to accept reality…
“Netflix is nearing a decision point. Sell out, like Shudder, and put the majority of your content on Amazon as a channel/station”
The fact that you think that Shudder and Netflix are comparable in any conceivable way, be that subscribers, reach, history, whatever, is laughable, but it does help demonstrate how clueless you are on many subjects.
The idea that Netflix would sell to Amazon because they have a couple of million less subscribers (many of the Prime subs being because it’s a free add-on to delivery not because they actually want it) it the funniest joke I’ve heard since Trump claimed he was too popular to have lost the election.
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Not at all. I have more choices today than ever. Apparently you fail to understand that some people don’t want to see things they support fail because of outside forces.
Do you not understand the difference between sell, and sell out?
You’re slipping Paul!
Slipping into Kobi territory. When your paid end over end slips behind a generally free to watch, which Tubi is, something is wrong.
I didn’t compare Netflix and shudder. I used it as an example of cutting content.
Netflix is currently spending big money to snag big film rights. The are funding that by cutting deals with the smaller studios.
Yet the fact is big film agreements don’t hold customers. They create short spikes in registered users that don’t renew as paid customers.
The board currently likes to fudge by looking at and counting the short surges as ‘we’re doing fine’. They are not fine.
The more little agreements they don’t renew for the next big thing the more they loose customers overall.
Outside of their own in-house content, they have no US exclusives. Every big film they spend on for rights is a collection of small multi-film contracts not renewed.
They aren’t bringing in the new customers when they stream films that are on other services. Bumps from one-offs aren’t being sustained.
They keep buying into non-exclusive exclusives.
They’re killing themselves.
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“Apparently you fail to understand that some people don’t want to see things they support fail because of outside forces.”
Of course, but there’s no way of avoiding outside forces in this market. Some are more impactful of others, but I don’t think your renting a DVD of Frivolous Lola or some other Tinto Brass movie will alter their fate whether or not they have it in stock.
“I didn’t compare Netflix and shudder. I used it as an example of cutting content.”
That wasn’t obvious, but fair enough if I misunderstood. Although, Shudder would seem to be a weird example in this regard. They have other content, increasingly including stuff licenced from Arrow (which concerns me slightly as I don’t like to see that market cannibalised), but in recent times they’ve placed more focus on
“Netflix is currently spending big money to snag big film rights. The are funding that by cutting deals with the smaller studios.”
You seem very much confused as to what’s happening. Netflix have multiple types of deals going on. For some, they’re bankrolling the whole movie from script to screen as a normal studio would. For others, they’re getting involved during production and bankrolling a release. Others they’re picking up for distribution at film festivals or grabbing international distribution after a domestic release in whatever country.
Sometimes this pays off – Squid Game, for example isn’t something that would exactly have played on prime time in the older days. Other times it doesn’t – some of the recent big budget “blockbuster” attempts have been fairly weak. But, then, people have watched them, and lower audience scores didn’t affect the Transformers franchise…
“Outside of their own in-house content, they have no US exclusives.”
Lol “outside of what they own they have no stock!”. Yeah, that’s how business works. It doesn’t matter how much you want a Big Mac, if you only visit Burger King you won’t get one.
“Every big film they spend on for rights is a collection of small multi-film contracts not renewed.”
Weirdly, this seems to be getting better, at least where I am.
“They aren’t bringing in the new customers when they stream films that are on other services”
Which is why they’ve spent so much time and money bringing in exclusives rather than depending on content that Sony, Disney or Universal can pull.
“They keep buying into non-exclusive exclusives.”
This is what I don’t understand, so maybe you could be more clear. Are you talking about mainstream titles that have a limited life before moving elsewhere, indie/foreign stuff that’s not only on Netflix, or what? Without some titles I’m not sure what you’re referring to unless it’s things like the Marvel shows that only had a limited licence and more than served their purpose.
“They’re killing themselves.”
In my mind, if they do this it’s not the content that will do it, but making the service less convenient. Once they try to push ads too much, try to crack down on people who may or may not be sharing accounts, etc., that’s what will push people to move away. It’s not going to be the content alone, but comparing it to when they could get any title they wanted for the cost of a disc and not an international licencing agreement is somewhat disingenuous.
Re: Re: Re:6 On paper
It may be a location issue for naming. I’m in the us, and will use here the terms they use in shareholder information. I know there some flux in exclusive and original.
Exclusive is a distribution rights agreement. Meaning they are the only US company streaming it in the US. It does not mean other companies don’t also stream to US viewers. Eros is the best example here as they have their own platform that doesn’t target but serves US viewers.
Originals are films that Netflix had some level of involvement in. Be from scratch, financial, or acting as the primary distributor sub licencing films internationally.
There’s so much inconsistency in using the terms though that it’s a bit hard to explain
All other content is licensed from another distributor. Netflix currently, as of Q1 2022 has over 600 source options. Nearly 700 but I don’t recall the exact number, independent license options. Meaning studios that are not one of the primary us studios or a subsidiary.
They also have option partnerships, that are time-delayed exclusives.
Over the last 20 months Netflix has cut, failed to renew, over a hundred indi contracts in chasing large single title studio rights. Not one of the purchased so-called AAA titles has shown subscriber retention.
Their hook is the extensive a deep independent catalog. But that catalogue is not getting updated for many imprints. They keep cutting contracts to score individual film streaming rights. Often with very limited duration contracts.6’months, 3 months. Or less.
In other words, they are dropping long term rights to many choices on a single contract to pay for a short term right to stream a single film.
Films that don’t keep customers after the trial period.
Re: maybe the long tail is a myth
The long tail is strangling Netflix. They make a lot of random stuff and 99% of it sinks without a trace. They are desperately scrambling to find the next Stranger Things, and they keep failing.
Meanwhile their competitors have huge IP to use. Obi Wan, House of the Dragon, Rings of Power, etc. Good or bad, it always hits big. Amazon is buying MGM to get their paws on IP like James Bond, Stargate, Blade Runner and Robocop. The IP tsunami has only just begun.
I really don’t know if Netflix can survive in the long run. Their 220M subscribers might be the high water mark and it’s downhill from here.
Pay AND have to watch ads? Where do I sign up?!
No see people pay money so they don’t have to watch ads…
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When I was younger, that was the claim for cable.
History repeats itself.
Netflix has to deal with a host of services, disney, hbo max , hulu etc also endless growth is not possible
in a world where any media company can launch an app,look at music streaming theres only 3 or 4 music streaming services.even youtube is facing strong competition from tiktok.i think they dont renew shows after 2 seasons because the think it does not attract new subscribers to make new episodes
Constant cancellations
For me, it’s been the never ending cancelation of shows along with the price increases. It doesn’t help they pumped in a lot of low quality foreign content, which just clutters up your searches.
We used to keep Netflix as a constant service, now we only sign up when a series we want to watch is released. The latter is decreasing in frequency.
Netflix can't just stand still
Why can’t Netflix just continue along at its current level without raising prices or trying other tricks? Because the competition isn’t standing still. When I see the hoopla around House of the Dragon and Rings of Power, I think “so are those people really going to bother to keep their Netflix subscriptions?” The more big stuff that competitors launch, the more Netflix loses subscribers. They are scrambling just to tread water now.
What ails Netflix is two things: they are competing with Amazon and Apple, tech titans that can spend stupid amounts of money on glitzy content without breaking a sweat. And they are also competing with Disney and Warners, which own big IP that can hit big even if it’s terrible. Boba Fett and Obi Wan were both hits for Disney+. When Disney makes a Marvel or Star Wars show, they don’t need to worry if it’s good or bad. It’ll be a hit regardless.
Meanwhile, Netflix burns through mountains of cash to find the next Stranger Things. Trouble is, they can try 100 things that come and go without us noticing and there still isn’t a Stranger Things in the mix. Even when they do something good, like Sandman, it doesn’t necessarily work. That’s probably going to get cancelled.
Ads won’t save Netflix because there may be no saving Netflix. Just because they invented streaming doesn’t mean that competitors can’t come along and do it more successfully.