The New York Times revealed on Monday that Netflix will accelerate plans to launch advertising on its platform. The idea is that, with a cheaper plan, the company can reverse the crisis that has intensified in recent months with the flight of subscribers.
Despite the dozens of weekly releases, those who access the platform seem to have fewer and fewer relevant entertainment options. proof of this is that the company expects to lose more than 2 million subscribers between April and June this year. Among the most common complaints about Netflix on social media are the high price of subscription and the increasingly less interesting content.
Investors noticed. The company’s shares plummeted. Netflix, which in November last year was worth US$ 307 billion, on Monday (9) was worth less than US$ 79 billion. Now, the streaming giant is worth a quarter of what it was six months ago.
Change of speech, again
According to a statement from Netflix to employees, to which The New York Times had access, the plan is that in the last quarter of this year the company will already have advertising.
The news represents another change. First, the company surprised everyone in April of this year by announcing that it would adopt commercials.
For years, Netflix and its executives have snubbed advertising on the platform. According to Reed Hastings, founder and co-CEO of the streaming service, the plan was to start advertising in one to two years. But as the news that publicity starts later this year became clear, Hastings’ second claim went downhill from there even faster. The move points to a Netflix increasingly “tightened” by competitors and investors.
In addition to freezing hiring and asking its employees to be more judicious with expenses, the company would be trying to cut 25% of production values., including reducing the number of chapters in the seasons. Despite comments from producers regarding this, Bela Bajaria, an executive at Netflix, denied this information and said that the stories always have the length they need.
Netflix would also be considering increasing efforts to license its original content to broadcasters and TV channels and competitors, a practice already adopted by other streaming services.
Brazil must be one of the first
In Latin America, the need for a cheaper plan is particularly high for the company. In the first quarter of this year, Netflix lost another 350,000 subscribers in the region. The platform ended 2021 with 39.96 million customers in Latin America, and by the end of March, the number had dropped to 39.61 million, according to the results report released by the company itself. Brazil represents about 50% of the number of subscribers on the continent.
In April, shortly after the announcement that it was considering launching advertising on the platform, Netflix accelerated the process to recruit a Brazilian executive from the TV market to lead its commercial efforts in the country. The idea is for this professional to set up a sales team and bring in advertisers willing to show their campaigns on streaming.
The increase in the price of plans was a relevant factor for cancellations at Netflix. With a cheaper subscription, even with advertising, the idea is to attract new users and recover those who canceled because they thought the price was high..
Brazil should be one of the first markets to launch this cheaper, advertising-supported plan. If all goes according to plan, the change should happen in October or early November this year.
Arrogance and inferior content
Netflix’s higher prices aren’t the only problem. There is also the rapid growth of competitors in streaming, with content increasingly attractive to subscribers. The news ranges from series from the Marvel and Star Wars franchises on Disney+ to major football championships on Amazon Prime Video and other digital platforms.
“Netflix grew while it had no competitors,” says one TV executive. “They really believed they were smarter and more creative. Hastings’ book (The Rule is No Rules, about Netflix culture) helped to increase this fiction. When the competition came to streaming, they stayed accommodated and thought nothing would affect them. “.
For the executive, “the crisis we see today began as Netflix, instead of innovating, made fun of competitors and did not take them seriously. Today, they have become the joke, as traditional companies seem better structured and accustomed to cutting costs in recent years”.
The prophecy came true, and Netflix is the new TV, even with the same problems: falling audience, increasing production costs and reducing revenue.
When talking about Netflix, one word frequently appears in the comments of producers, directors, artists and executives from competing companies: arrogance.
“They thought they were better than everyone else,” says one screenwriter. “I’m concerned about the impact the Netflix crisis will have on productions and their teams, but I won’t deny the pleasure I get from seeing them screwed.”
“The process at Netflix was chaotic,” says one producer. “They are super nice, but everything is decided outside and they don’t listen to anyone. They spend a lot of senselessly. I would send a script and for every five lines I wrote, there were 50 lines of comments and suggestions. people wanting to show service and always having to say something”.
According to this producer, after months of working on a script for a production that already had a director and contracted artists, Netflix canceled the attraction without giving further explanations. “They paid everything right, including the contract fines. It was a waste of fortune, but the lack of transparency made the frustration even greater,” he said.
Before it gets better, it will get worse
The news of a cheaper plan, even with advertising, is good. Research shows that most streaming users don’t mind watching advertising if they can afford to pay less (or nothing). But there’s also bad news coming from Netflix.
On the same day that he said he was studying the creation of the cheapest plan with advertising, the Netflix said it will step up its fight against password sharing. The idea is to charge about R$15 more to those who share a password if they do not live at the same address as the person who also uses the service.
The novelty is being tested in Chile, Costa Rica and Peru and has already caused a lot of controversy, including protests on social networks.
But the logic is simple: by fighting password sharing, Netflix is expected to drive more subscribers to its advertising plan. The giant has 222 million subscribers worldwide, but, according to the platform itself, another 100 million homes watch content using shared passwords.
Not everything is lost
Netflix has come out of other crises throughout its history. The moment is bad, but it is far from the end of the company, which continues to make billions of dollars and started to make a profit last year.
The company also bets on offering games on the platform, in addition to investing in real-world experiences, in the style of Disney with its parks and shows on Broadway.
Fans of the Bridgerton and Stranger Things series can participate in immersive experiences in select cities in the United States and in European countries where attractions are available. Bridgerton viewers can interact with actors dressed in the show’s period clothing. Stranger Things followers can enter a multimedia park similar to GExperience, Globo’s theme park.
It becomes increasingly clear that the news that made Netflix the leader in streaming have already been copied and improved. Competitors like Globoplay, HBO Max and Paramount+ launched advertising on their platforms long before Netflix. To stay on top, the streaming leader will have to go beyond copying. It needs to innovate again and, above all, produce quality content consistently, to be even better than its competitors.