Online Streaming: What’s Next For Netflix
As our economy is in a constant state of flux, businesses are consistently working to thrive and keep their edge in our ever-changing marketplace. Netflix is no different and they are finding ways to stay above the rest. They are facing the same challenges as their competition, in particular, a slow down in the growth of subscribers and lower consumer discretionary spending.
As more companies are establishing themselves in the streaming space, like The Walt Disney Company and Amazon, Netflix is evolving and adapting, which means that they will be moving past their current business model. This is common practice for businesses across all industries, as businesses engage to secure sustainable growth in earnings in the long run.
Earlier this year, Netflix hinted about moving its streaming service into an ad-based model. The company also announced in July that it would partner with Microsoft Corporation to launch the model in early 2023. However, it seems that the deadline has moved up the launch of the ad-supported tier to November 1, 2022, ahead of Disney+, which is also planning to implement ad-supported streaming on December 8, 2022. These are exciting, and strong proactive steps.
According to released statements, the ad-supported tier will be set in motion for a selected number of markets where the advertising spend is already high. The U.S. region has the biggest digital ad spend and is also Netflix’s largest acquired piece of the pie. As a result, the ad-supported tier will most likely launch in the U.S. before moving on to other key markets throughout the world.
In an article published by Variety, it is said that the ad-supported tier will launch in the U.S., Canada, UK, France, and Germany. But, it is also worth noting, that Netflix isn’t the only streaming platform to adopt the ad-supported tier strategy. For example, both Hulu and HBO Max have ad-based plans, which are less expensive than their ad-free plans. As mentioned previously, Disney+ is also in the process of joining the platforms, offering ad-supported streaming.
Those following this news believe that Hulu is a prime example of how the implementation of an ad-supported tier on a streaming platform can be a success story for these companies. For instance, Hulu has an estimated subscriber base of 40 million and has produced close to $4 billion in advertising revenue annually.
As the implementation of the ad-based platform for Netflix approaches, it is important to keep an eye on how the company will approach the platform change with its partner Microsoft. All things considered, this may prove to be an outstanding outcome for Netflix, as it is the largest streaming platform in the world.
Too good to be true? Investors will have to wait and see, but many speculate that this change will ultimately generate substantial and long-term growth for the company, while still offering quality streaming services. Netflix will have evolved, with a new business model, providing itself with a sustainable future-forward platform.
The Takeaway
Netflix is facing business challenges like many other companies – stay the course and hope, or evolve their business model to address the current and forecasted marketplace. Netflix is being challenged to find that new mix. By editing their model into an ad-based streaming service they will be able to significantly increase revenue while providing for sustainable growth and keep their majority market segment.
About Vedette Finance
Vedette Finance, founded by Tarek Anthony Jabre, in 2012, is a film development and finance company, with a wide-reaching international network of finance and talent. The company’s fundamental objective is to develop its premium value slate, creatively, and structure the financing, to maintain a steady output of high-quality film releasing. For more information, visit www.VedetteFinance.com