Netflix not sewing threadless to protect its business from the volatility of the stream | companies

Netflix is ​​growing again in subscriber numbers. giant streaming To the surprise of many, he succeeded in reversing it. Loss of customers in the first half of the year. It’s something that happens after raising prices in key markets, facing stiff competition, and feeling the pressure of the cost of living. This Tuesday It announced that it added 2.4 million subscribers between July and September and expects to add another 4.5 million by the end of the year. It’s an optimism that has boosted its shares by more than 14% in the protracted closure of Wall Street and pushed its titles 12% higher yesterday.

How was this comeback possible? Is the Netflix crisis in July exaggerated? Will your subscribers continue to increase? The answer is not easy, as the loss of customers in the first half was driven by many factors that created an ideal breeding ground to bring the platform down. On the one hand, we are facing a consolidated company, has a very strong position in key markets such as the USA or Canada, where growth in subscribers is already difficult. On the other hand, the absence of major releases between January and June, which is essential for a business related to the content and the macroeconomic and geopolitical situation. The war in Ukraine, the suspension of Netflix service in Russia, and the shrinking of service adoption in the company’s emerging markets, Eastern Europe, were decisive for the multinational’s loss.

But it was enough to touch some of these pieces of the puzzle to get the order: foreign Things, in two volumes and with very long chapters, it was a bombshell and at the same time The Beast: The Jeffrey Dahmer StoryIt became the second most watched English program in Netfix history. Both content helped bring viewers back to the platform. And just around the corner is the premiere of its final season. CrownII. After Isabel’s death, it was seen to act as a lever to attract subscribers.

Content won’t be the only card Netflix will play in the coming months as it continues to add subscribers and try to protect the company’s health by increasing its margins. for flow king His hand does not tremble when he reconsiders the principles with which he started to work and stands out among the measures he has put into practice. launch of a new subscription plan for its cheaper ad-based service starting next Novemberpolicies for those who share their accounts, which they have already tested in some Latin American countries and will begin to be widely implemented in early 2023.

The company determined that “only people living with you can use your account.”. If it detects account sharing, it will charge extra from its owner as a sub-account. platform that creates a way to transfer user profiles along with their histories, and show preferences to new accounts She knows this can bother many users so that personalized configurations don’t get lost, but she seems clear that it’s a “necessary measure” for her business’s sustainability, as UOC professor Elena Neira puts it, and that Netflix has a “belly” to turn non-paying users into paid subscribers. ” is at the point of the flexibility of the proposal that will enable it to happen.

Reaching 1,000 people by advertising on Netflix may cost 50% more than other competing services

“Users who share accounts without paying are users who don’t rent, because Netflix counts subscribers, not users. And the formula you pose (expand users in your account) The raise it raises assumes two more euros, which is very small. Worse still, what Disney will do is want what we currently pay for the plan without ads (8.45 euros) to be the cost of the plan with ads, which means that the ad-free rate will become more expensive.

The proposed changes will help the company monetize, but some analysts doubt it has much more room to grow in certain markets, such as the US, where most of the competition has stalled subscriber growth. months, and where Netflix represents about 8% of television viewing time, it’s in line with YouTube, but far ahead of Amazon Prime Video and Disney.

Netflix, so far unrivaled in content rotation (not in quality), had already advanced months ago. It will stop guiding investors on the number of new subscribers hopes to catch up in the coming months. It is a response to Wall Street’s demands. What matters to the market is the value of the company as it ages, which is no longer determined by the number of subscribers, but by how profitable the company is. That’s why the platform is smart at creating advertising, a new revenue line that will allow it to compete with traditional television for advertisers.

Netflix does not stitch without thread; You know that with the new ad service, subscriptions will only be one component of your revenue growth.

officials said that hundreds of advertisers have already secured campaigns on Netflix, and what analyst Júlia Alexander commented in the latest Puck News article is that they sell a CPM of $60 in the US (where the advertiser pays for every 1,000 times their ad is shown), advertising in that country on demand on other video services, the usual thing is around $40 .

It’s not yet clear how the advertising industry will fare in the medium to long term (Spain’s Atresmedia and Mediaset will no doubt be on the alert), but early indications suggest the company could very well come out in the picture. “We must not forget that Netflix is ​​a technology company. Ingredients can be delivered regularly in 70% of cases (although target in 30%), but A company with technology in its DNA and if there is anyone who can profoundly disrupt the way advertising is delivered and create innovative formats, it is Netflix that has the capacity and the data to do so,” says Neira. Of course, flow king knows very little about the consumption habits of its users.

Another teething activity is video gaming. Mike Verdú, vice president of Netflix, said in a statement yesterday, TechCrunch said it will expand into cloud gaming and will open a new game studio in Southern California, which will be the company’s fifth. Betting is not without risk. Google launched Stadia and Amazon Luna, which try to sell video games that people can play even if they don’t have an expensive PC or console, but they’re struggling to achieve widespread adoption. So much so that Google recently announced that it would stop the Stadia service in January.

Now this business does not bring money for him and brings a lot of expenses, but he is starting a company with more income lines, which keeps him in a volatile business like trading. streaming. In addition, video games offer them an extraordinary opportunity. receive get engaged and loyalty. Despite the setbacks, Netflix can still take advantage of being one of the few platforms. streaming Who is making money? And this is no small thing.

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