Netflix eyes ads as subscriber growth slows | WARC | The Feed

Netflix eyes ads as subscriber growth slows

With around two million fewer subscribers than predicted in Q1 2022 and a similar shortfall expected in Q2, video streaming service Netflix is preparing to explore a new subscription layer that includes ads.

Why it matters

As penetration deepens and competition increases, it’s getting harder to rely solely on increasing subscriber numbers to grow revenue. Advertising is one obvious route to continued growth.

Takeaways

• Netflix identifies four factors contributing to slowing growth in subscriber numbers: things it doesn’t control (such as uptake of connected TVs and data costs); account sharing among existing subscribers; increased competition; and macro factors (rising inflation, Ukraine conflict etc.).
• Netflix will look to monetize sharing and will ask members to pay a bit more to share the service with people outside their home.
• Citing consumer choice, CEO Reed Hastings believes that “allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense”.

Key quote

“We can be a straight publisher and have other people do all of the fancy ad-matching and integrate all the data about people. So we can stay out of that and really be focused on our members creating that great experience and then again, getting monetized in a first-class way by a range of different companies who offer that service” – Reed Hastings, CEO, Netflix, on an earnings interview.

Sourced from Netflix, Seeking Alpha [Image: Pexels]