✔️ 2022-10-20 06:09:16 – Paris/France.
Netflix is growing in subscribers again. the giant of diffusion succeeded, to everyone's surprise, in reversing the loss of customers it had suffered in the first half of the year. Something that had happened after raising prices in key markets, facing fierce competition and feeling the pressure of the cost of living. On Tuesday, he revealed he added 2,4 million subscribers between July and September and said he plans to add another 4,5 million by the end of the year. An optimism that sent its shares up more than 14% in the extended Wall Street shutdown and sent its stocks up another 12% yesterday.
How was this reversal possible? Was Netflix's July meltdown overdone? Will your subscribers continue to grow? The answer is not easy, as the loss of customers in the first half was due to multiple factors which created a perfect breeding ground to drag the platform down. On the one hand, we are facing a consolidated company, with a very strong position in key markets, such as the United States or Canada, where it is already difficult for it to grow in subscribers. On the other hand, the absence of major releases between January and June, essential in a profession linked to content, and to the macroeconomic and geopolitical situation. The war in Ukraine, the suspension of the Netflix service in Russia and the contraction of the adoption of its service in the countries of Eastern Europe, emerging markets for the company, have been decisive for the multinational.
However, it was enough to touch a few of these pieces of the puzzle to turn the corner: the first of strange things, in two volumes and with very long episodes, it was a bomb, and also that of Monster: The Jeffrey Dahmer Story, which became the second most-watched English-language program in Netfix history. Both pieces of content helped bring viewers back to the platform. And just around the corner is the final season premiere of La Couronnewhich after the death of Isabella II appeared as a lever to attract subscribers.
These will not be the only cards Netflix will play to continue adding subscribers over the next few months and try to maintain the health of the company by increasing its margins. At king of Streaming his hand doesn't seem to be shaking as he reconsiders the basics of his business and among the measures he is putting in place is the launch of a new subscription plan for his cheaper service with advertising, which starts in November next, and policies aimed at who shares their accounts, which they have already tested in some Latin American countries and which will begin to be widely implemented in early 2023.
The company has determined that "only people who live with you can use your account." If it detects account sharing, it will charge the holder extra as a sub-account. The platform, which created a way to transfer user profiles as well as histories and view preferences for new accounts so that the custom configurations are not lost, he knows that this can annoy many users, but it seems clear that "it is a necessary measure" for the future of his company, as says the professor of the UOC Elena Neira, pointing out that Netflix is at a point of elasticity in its offering that will allow it to "get scale" to bring users who aren't currently paying into paying subscribers.
Reaching 1 people with advertising on Netflix can cost 000% more than on other competing services
“Users who share accounts without paying are users who don't rent, because Netflix counts subscribers, not users. And the formula that you pose (expand your account users) he assumes two euros more, with which the increase he raises is very small. Worse, that's what Disney is going to do, which wants what we pay now for the ad-free plan (8,45 euros) to be the cost of the ad-free plan, which means that the ad-free rate will become more dear.
The proposed changes should help the company make money, although some analysts doubt it has much more room for growth in certain markets, such as the United States, where much of the competition has also seen subscriber growth stagnating in the United States. months and where Netflix represents about 8% of television viewing time, in line with YouTube, but well ahead of Amazon Prime Video and Disney.
Netflix, so far unbeatable in the rotation of content (not in its quality), has already advanced months ago that will stop providing indications to investors on the number of new subscribers which he hopes to capture in the coming months. It is a response to Wall Street demands. What interests the market is the value of the company which, aging, is no longer determined by the number of subscribers but by the profitability of the company. For this reason, the platform is adept at creating a new line of revenue, advertising. Netflix does not sew wirelessly, and stresses that with the new advertising service, subscriptions will only be “one component of our revenue growth”.
Its officials said that hundreds of advertisers have already secured campaigns on Netflix, and what analyst Júlia Alexander comments in her latest Puck News article is that they're selling a CPM (what the advertiser pays for every 1 times their ad is shown) of $000, whereas in other ad-based video-on-demand services in the US, the usual thing is that it's around $60 (40% more).
It remains to be seen what path its advertising activity will take in the medium and long term, but the first indicators show that the company can very well get out of the picture. “We must not forget that Netflix is a technology company. Content can be given regular in 70% of cases (although in 30% it hits the target), but is a company that has technology in its DNA and if anyone is capable of profoundly disrupting the way advertising is served and creating innovative formats, Netflix has the ability to do it and the data,” says Neira. Of course, the king of Streaming knows the consumption habits of its users like few others.
Another activity that puts the tooth is the video game. Netflix VP Mike Verdú told TechCrunch yesterday that it will expand into the cloud Gaming and will open a new games studio in Southern California, which will be the company's fifth. The bet is not without risk. Google has launched Stadia and Amazon Luna in a bid to sell video games that people can play even if they don't have an expensive PC or console, but it's struggling to become mainstream. So much so that Google recently announced that it will be discontinuing the Stadia service in January.
Now this activity does not generate money for him, and it generates a lot of expenses, but he is building a business with more lines of income that protect him in such a volatile business as the diffusion. In addition, video games offer them an extraordinary opportunity to to get engagement and loyalty. Despite the setbacks suffered, Netflix can still take advantage of being one of the few Streaming which brings in money. And that's no small feat.
SOURCE: Reviews News
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