This week has seen Netflix performing an about-turn with an announcement that it was finally ready to launch a streaming service that features adverts. The new streaming service will be created in conjunction with Microsoft and it will run alongside the current Netflix no-advert streaming platform.
There is still little indication from Netflix as to how much it will charge for the new streaming service, but it will be cheaper than its current subscription service. The plan will feature Microsoft jumping aboard as a sales partner and using its global advertising technologies.
Netflix is already talking with TV and movie studios about the project and how it can renegotiate deals to factor in the inclusion of adverts. So far, the likes of Universal, Sony and Warners have been approached by the streaming company.
It’s a remarkable turnaround from Netflix whose whole ethos once appeared to be that monthly subscriptions would allow customers to enjoy streamed content without adverts. However, it seems as though the streaming brand has been left but with little option but to target a lower price point in the increasingly congested market.
Wall Street seemed relatively unimpressed with the announcement. As of Thursday morning, Netflix stock was trading at a price of $176.56 which is well below the $597.37 that it was trading at at the start of 2022. All of which means that Netflix has some way to go before it gets out of its current predicament.
Netflix has had a torrid 2022 where it experienced its first fall in subscribers in over a decade. While there were expected to be over 2.5 million new subscribers in the first three months of the year, Netflix somehow managed to shed 200,000 customers. This was enough to wipe a staggering $50 billion off Netflix’s market value.
Already the streaming giant has had to cut hundreds of jobs in the past few months, and the price of Netflix stock has fallen through the floor as a result. Like many tech firms, Netflix has had a tough time as people returned to normal life after the pandemic.
Plus with skyrocketing price rises hitting households hard, it has meant that people are canceling their Netflix subscriptions as a way of cutting costs. Netflix has also blamed Russia’s invasion of Ukraine which it said has lost them 700,000 Russian subscribers, and it has also pointed the finger at those who share their Netflix passwords with other people.
All of this comes at a time where there is an increasing number of heavyweight brands competing for a share of the lucrative global streaming market. Early big-hitters like Amazon Prime and HBO Max have been joined by relative newcomers such as Apple TV and Disney+. This has meant that each company is having to fight hard to attract the limited number of potential subscribers.
Our favorite brokers for stocks trading
