Are you still watching?

Are you still watching? post thumbnail image

Recently Netflix announced some changes and initiatives for the platform moving forward.

  1. Introducing an ad-based service. This will surely provide a lower monthly price point, but how much lower, and will people want to deal with ads to save a few bucks?
  2. A video game option integrated into the platform in some way.
  3. Steps to limit and hopefully eliminate credentials being shared.

Monthly plan with ads: Netflix CEO, Reed Hastings recently said, “Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Hastings said. “But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want, makes a lot of sense.”

That quote makes it appear this is for the user. On the surface it would appear it is. It is not. Netflix added subscriber projections last quarter of 250,000 were way off. The stock is suffering, and this is a way to generate more revenue. It is that simple. This is a win-win for Netflix as this is not unheard of. Other streaming platforms such as Hulu, Peacock and others offer ad-based programs which includes advertisements.

Again, Netflix cannot lose here. Reminder – Netflix recently increased cost on non-advertisement plans in anticipation of launching the ad-based service. Brilliant, as most users will take the lumps and pay the increase. If they should cancel, many will return for original programming that is exclusive to Netflix. The company will offset costs of a lower monthly plan via the recent price increases and bring in advertising dollars to cover the shortage in projected membership fees.

Video game development: From what we can tell, Netflix will stick with offering their mobile game service at no extra cost, but not much else is available regarding information or specifics yet. We do know they have staked claim to being “the Absolute Best Gaming Service” over time, and they are committed to do so. This points to moving beyond mobile gaming and eventually bringing a gaming service to the user’s television.

Sharing login information: This is where it gets fun. For companies like this to generate the monies needed to keep shareholders happy, Neftlix must make every attempt to lessen the damage. I cannot begin to guess how much money is lost each month to password sharing, but here is my best estimate: At the time of writing this, Netflix has 221 million subscribers. If we assume there are another 30% of people (conservative estimate) that use someone else’s credentials to watch the programming, that is another 66.3 million people. Let’s go low side at $12.00 a month. Those are losses of $795.6 million PER MONTH! You must try to stop that bleeding if you can. This is why, Apple TV is the GOAT. No one is getting my iTunes credentials. Not a chance.

So with the upcoming changes to Netflix’s service, are you still watching?

Related Post