From “never ads” to “never say never” to ads (Ethan Miller/Getty Images)
Binged “Anatomy of a Scandal”... Netflix knows we can devour a limited series as if we had unlimited time. The streaming leader revealed yesterday that it lost 200K subscribers last quarter (it was expected to add 2.5M). Even worse: it expects to lose 2M global subs this quarter. Flix shares plunged 25% after hours and are down over 40% this year.
Netflix’s ultimatum... Unlike Hulu, HBO Max, and other ad-supported streamers, Netflix has rejected commercials, relying instead on subscription $$. In 2019, CEO Reed Hastings said he’d never do ads, “period.” But high prices (#flation) + subscription overload (#subscripuration) have made it harder for consumers to afford multiple streamers. Fast-forward to now:
It’s the price-cutting paradox… Lowering prices can boost revenue — but only if customers who were paying “premium” prices don’t downgrade. Netflix’s $15.50/month standard plan may be out of reach for many budget-conscious households, so adding a cheaper plan supported by commercials could help it grab a new market. The risk: subscribers who are paying for pricier ad-free plans might downgrade (that hasn’t happened to HBO Max yet). As streaming competition intensifies, it may be worth the risk for the Flix.