Ads on Netflix? – The Rise and Fall of Netflix
2022 is a very rough year for Netflix. The online movie streaming giant lost a massive 200,000 of its subscribers and saw its stocks plummeting to a historic low of 70 percent. Although there are many reasons behind this, the leading cause is their tad bit pricey subscription plans.
To fix this, the C-suite execs at Netflix have inevitably had to go down the ads route. Netflix co-CEO Ted Sarandos has confirmed that Netflix will soon run ads in its cheaper plans from this December. While speaking at the Cannes Ads festival, Ted hinted at partnering for ads with firms like Google and Comcast to test the waters.
In fact, co-CEO Reed Hastings had earlier alluded to this in the first-quarter earnings call. He made it amply clear that, though he prefers an ad-free simple subscription model, he is not against more affordable plans with ads for customers who are open to advertisements.
Netflix is not alone in embracing ads for better subscriber counts and revenue. HBO Max already has a cheaper subscription plan with ads. Whereas Disney plus has revealed such plans in store for late 2022.
The Rise of Netflix – An Interesting Saga
A few years ago, Netflix was ruling the roost in this sector. It was practically the hegemon before whom production companies queued up for deals. But, ever since the online streaming service market got fragmented and other major players entered, it all went downhill for Netflix.
Though competition is good for customers, it may not be the case, at least for now. This is because the main reason behind the rise of Netflix was that consumers were fed up with Cable and its exorbitant pricing. They had to pay unreasonable prices to watch the content they were interested in, bundled with a bunch of irrelevant content.
Netflix was a big lifesaver since it had all the binge-worthy content in one place for a reasonable price. It even came to be known as the ultimate “Cord-Cutter.”
Netflix Used to have Everything
The high-speed internet penetration into developing markets and the advent of 4G attracted other big-wigs into this very lucrative sector. Disney Plus, HBO max, Hulu, Apple, and a couple of others set up shop like never before. This introduced an unprecedented level of competition in the market. It was very good news for production houses since they no longer have to depend on a single streaming service to distribute their content.
Whereas production houses like HBO and Disney realized that hosting their streaming service was cost-effective.
All this led to a splintering of the entire industry. Now the average consumer is facing a conundrum. Neither are all of their favorite shows in one place, nor are they affordable.
The pandemic only delayed the inevitable. As soon as the pandemic restrictions were lifted, Netflix subscribers began leaving the platform in droves.
Netflix Ads – Blockbuster Karma or Just a Rough Patch?
The recent Dave Chapelle controversy, the layoffs which followed, and the Ads decision is seen by some observers as karma biting Netflix on its back. Some readers will remember how Blockbuster used to be the real deal for renting movies back in the day. Netflix was the new kid on the block. And then it all happened. Netflix completely swallowed Blockbuster’s market share in no time. All this happened because Blockbuster was reluctant to adapt to the changing environment.
Is Netflix repeating Blockbuster’s mistakes?
Some would say the current lull is temporary, and we hope that is the case.
Changes We Would Like to See on Netflix
Netflix has a catalog problem more than a content problem. All its diverse content is buried deep under the byzantine maze of suggestions. For example, suggestions for each user account may vary like night and day. Although this was a good thing back then, it is not accurate anymore.
Instead, we would like to see its content more organized around content hubs like themes, production houses, etc. This will solve the content discovery problem to a certain extent.
And finally, we have to address the elephant in the room. Netflix needs to produce more quality content that can rival Hollywood big wigs like HBO and Disney. Currently, Netflix Originals has only a few successful shows in its pockets. It is not enough, and it needs more to eat its competitors’ market share and gain more subscribers.
But, the recent news that Netflix plans to get into video games is a worrying trend. This is a sign that, as an organization, it is planning to diversify to retain its subscribers. While diversification by itself is not bad, it is definitely a sign of desperation in this case.
We only hope that Netflix will wake up and smell the coffee.