Ad-Based Netflix Arrives With A Thud
from the this-ain't-it,-boss 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 short-term growth, but often at the cost of brand reputation and long term 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.
Instead of focusing on service quality and not being annoying, Netflix executives spent much of the last year insisting that a ham-fisted crackdown on password sharing and a new ad-based tier would fix what ails the company. But right out of the gate, Netflix’s new $7 “Basic With Ads” tier was saddled with all manner of annoying restrictions that undermined its entire purpose.
Ad-based customers can’t stream in standard HD (all streams are restricted to 720p), can’t stream to more than one device simultaneously, can’t download films to watch on a plane, and see a 10% smaller catalog overall due to licensing constraints. The ad-based tier also wasn’t initially supported on a number of different hardware platforms, including Apple TV or older Chromecast devices.
Shockingly, this all resulted in the new ad-based tier being the least popular option in its first month of life:
Subscription data analytics firm Antenna shared their data with Gizmodo where it noted that just 9% of all new Netflix subscribers opted for the Netflix Basic With Ads Tier last month. The $6.99 a month service launched Nov. 3 in the U.S., but Antenna told the Wall Street Journal over half of those ad-based sign ups were people re-upping their subscription after it lapsed or were joining for the first time.
The hope is to get people hooked on a cheaper tier, then upsell them through annoyance to more expensive, less restrictive tiers. That’s basically the upward funnel model the traditional TV sector adopted for decades, working tirelessly to push customers to higher priced tiers or bundles by annoying the hell out of them, since you don’t actually want users staying on the cheapest option possible.
A cheaper ad-based tier doesn’t really fix what ails Netflix because it’s not actually fixing what customers are getting annoyed by. Wall Street doesn’t want to embrace any of the things customers actually want (lower prices, improved service quality, fewer obnoxious restrictions) so you get stuff like this designed to look creative and appealing but isn’t, actually. It’s the inversion of actual innovation.
Stuck under Wall Street’s thumb, Netflix seems intent on reducing quality while nickel-and-diming existing customers, which won’t work in a hyper-competitive streaming space where consumers actually have the choice of competitors that are still actually focused on quality, affordability, decent support, and customer satisfaction.
Filed Under: ad-free-tier, advertising, cable tv, competition, password sharing, prices, streaming, video
Companies: netflix
Comments on “Ad-Based Netflix Arrives With A Thud”
Quibble: 720p is the definition of “standard HD” (as opposed to “Full HD (FHD)” which is 1080p).
Re: in 2007 terms , I agree
for me though on the door step of 2023 AD 1080p is really considered Standard HD.
As is fully anecdotally supported by me trying to watch Netflix in Chrome browser @ 720 because it doesn’t support 1080 due to some DRM bullshit.
and thinking this looks like total shit
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I'm on the Fence
There isn’t much reason to stay on Netflix anymore. A lot of poorly produced woke crap and bad business decisions. Don’t see why I should be enabler if they continue down that path.
Re: Wake up fence-sitter
How long before the right-wing-nuts around here realise that using the w-word in any kind of pejorative sense is going to get their comment flagged by many here as a simple reflex action?
Re:
“A lot of poorly produced woke crap”
The fun thing is, you don’t have to watch the stuff you don’t like, and that if you watch what meets your tastes instead then they’re more likely to make more of that.
But, I tend to read “woke crap” from the whiners as “they dared to make someone other than a straight white man the lead” or “they acknowledged something other than right-wing identity politics as being valid”, in which case I dare say the potential audience is larger than if they catered only to your needs.
'... that's it? Why was anyone touting this as good?'
You only get one first impression and if someone’s first impression of Netflix is low quality videos, riddled with ads and with a poor catalogue of things to while while some might get annoyed enough to pay more I suspect that even more will decide to drop it entirely and look elsewhere, making this a terrible business decision on basically every level.
the good old wall street infection
it seems when a good company gets to a certain size, they tend to forget why they started in the first place! they become the monster they despised and are just chasing the $$$$$.
and these big dummy’s can’t figure out why people are cutting the cord! and in this case it would be the digital cord……
Time to move on. Haven’t really been watching it lately anyway. Good luck Netflix, too bad you are fucking the golden goose.
Who is...
Who is this Wall Street? Is she/he/it akin to The Children? Surely, with God/Allah/Buddha/[insert preferred deity] on our side, we can prevail against this being.
All those MBAs though
Why can’t they just NERD HARDER to make those MBAs correct about making NETFLIX worse and still making more money ?
Re:
Funny how no one ever suggests “MBAing harder”.
I’ve never seen this as a good idea. It seems to be a reaction to price rises and the fact that Netflix now has real competition, combined with the first drop in subscribers in their history. I don’t think a small discount will help, but I also think the problems were overblown in the first place.
The bigger dangers are their increasing reputation for cancelling quality series prematurely, and their attempts to compete directly with blockbuster level productions while not catering to other markets (the decision to screen Glass Onion theatrically for marketing purposes then removing the option is way more problematic IMO).
…Should be ignored if not outright told to go screw itself, in my opinion. Then again, I’m nowhere near being an expert on the stock market/Wall Street, so I have no clue if that’s actually a good idea.
Either way, though… the definition of insanity is doing the same thing repeatedly while expecting different results, and those who fail to learn from the mistakes of the past are doomed to repeat them – and there’s been so many companies that have insisted on kneecapping themselves (as Netflix is doing now) to appease Wall Street, you’d think others would try not doing that.
/facepalm
The “competition” Netflix is seeing is little more than content fragmentation (especially from the major studios that have their own streaming services).
Why is this never acknowledged in discussion about Netflix’s woes?