A small revolution is brewing at Netflix. To fight against the loss of subscribers, the streaming platform plans to offer cheaper formulas financed by advertising but also to broadcast live shows.
Things are moving at Netflix. To cope with the loss of subscribers at the beginning of 2022 – a first in its history – and to fight against increasingly serious competitors, the famous streaming video service would prepare two major changes: on the one hand, the arrival a cheaper offer supported by advertising; on the other, the broadcast of live broadcasts, modeled on traditional television and platforms like Twitch. A real revolution for this company, which has built its success on a totally on-demand offer, free of any time constraints and any advertising breaks. And which will force the company to review its economic model, visibly more fully adapted to the current market, to meet demand and reconnect with its insolent growth.
Netflix faces tougher competition
The period is not rosy for Netflix: for the first in its history, the streaming video platform has lost subscribers. As explained The Express and The echoes, the SVOD (subscription video) service thus has 200,000 fewer customers in the first quarter of 2022 than in the last quarter of 2021 – and even 600,000 in its native lands, in the United States and Canada! – while he hoped to recruit 2.5 million more. A historic underperformance – especially after the record rise during confinement – which led to a spectacular 23% drop in its stock market share in the hours that followed the presentation of its quarterly resultson April 19.
The loss of Netflix subscribers has three main causes. First, the company is said to have lost some 700,000 customers in Russia in the space of a few weeks, following the suspension of its service as a sanction for the war in Ukraine. Without this measure, it was counting on 500,000 additional subscriptions compared to the previous quarter, it underlines in its press release. Then and above all, while it has long been almost alone in this nascent sector, the video platform has had to face increasingly tough competition for several years, with the proliferation of streaming services and, above all, the arrival of behemoths like Disney++ or Amazon Prime Video, which have gained solid market shares in a short time. Finally, to continue to produce original content – its great specialty which has contributed to its popularity – Netflix has constantly increased its prices all over the world: thus the basic subscription, with a single stream in SD ( standard definition) is now at 8.99 euros per month in France – against 7.99 euros when it arrived in 2014 – while the top-of-the-range formula, with four HD or 4K streams, today reaches 17.99 euros against 15.99 euros in October 2021.
Consequences: many customers – acquired or potential – have gone elsewhere and many are now indulging in account sharing to reduce costs, either between relatives or with strangers, via specialized platforms (see our article). A practice against which Netflix tries to fight, by proposing an adapted offer via the addition of additional profiles for a fee, which is very likely to have a negative effect in the long term on its subscriber base, especially if the competition authorizes it. or tolerate it at no additional cost…
A cheaper Netflix subscription thanks to advertising?
Hence the surprise announcement of a paradigm shift. Thus, while he totally refused to do so since the beginning of the company, Reed Hastings, the co-founder and co-director of Netflix, officially declared that the company was now open to the integration of advertising in its content: a new source income that would allow it to offer cheaper subscriptions – while maintaining advertising-free formulas – so as to align with the competition and curb the flight of subscribers. However, this “revolution” will not happen overnight because the platform will have to set up an advertising agency worthy of the name while adapting its service to the integration of spots. But given the situation and the pressure from its shareholders, it seems that Netflix is making great strides to offer a formula with advertising as soon as possible, by the end of 2022.
If this development seems both desirable and inevitable, it will once again raise the question of profiling. Indeed, by knowing exactly who is watching what, thanks to its user profiles, Netflix knows the tastes of its subscribers perfectly, which will allow it to very precisely target the advertisements broadcast with its content. An undeniable asset for offering its services to advertisers. But that may not be to everyone’s taste, especially at a time when the tracking and confidentiality of personal data are very sensitive subjects…
Live shows on Netflix?
The other major change that Netflix would prepare would be the broadcast of live content, in live streaming. At least that’s what the platform would have confirmed to Deadline, a media that follows the news of American studios. According to this confidence, Netflix would offer unscripted shows and stand-up type shows. New exclusive content that would look like what you find on popular platforms like Twitch – which is owned by Amazon – but also like you find on traditional TV channels. But it is not impossible that Netflix also enriches its live catalog of sports programs, as Amazon offers with Prime Video, in particular Ligue 1 football matches, or even, who knows, cultural events (shows, concerts, etc.) ), the goal being, again, to stop the hemorrhage of subscribers while attracting a new audience. However, unlike the low-cost offer with advertising, the deadline for live is still vague and, to say the least, distant. And if it is confirmed, there is little chance of seeing it appear before 2023, the time to set up all the necessary infrastructure and design the programs.