Netflix Changes Its Tune
The company even cited a Nielsen number in its earnings discussion
Netflix is changing its personality as it fights market saturation and increased competition and the subscriber declines that is bringin.
The big news out of Netflix's earnings report Tuesday was that it lost 970,000 subscribers. That's Netflix's second quarterly drop in subscribers and its largest yet. That was half of what either Netflix or analysts had expected and most of the drop was domestic. Netflix fell by 1.3 million in the US and Canada, about 770,000 in Europe and West Asia and gained around a million in Asia Pacific while staying essentially flat everywhere else. Even with the subscriber decline the company. Revenue was up 8.6% over last year. Netflix projects a gain of 1 million this quarter.
But the part that matters most to us is the details on Netflix’s change of heart around advertising and password sharing.
The fight against password sharing has a timeline now. Netflix plans to launch one of its plans to fight account sharing sometime in 2023.
Netflix also said it will launch its advertising-supported tiers in markets where ad spending is "significant" starting in early 2023. The company previously had hoped to launch the new plans by the end of the year. Netflix keeps insisting that its way of doing ads will be fundamentally different than linear TV.
One new bit of info on the ad-supported tiers is that not all content you get on ad-free Netflix will be available. Netflix can play ads along with anything it owns itself and anything where the license doesn't stop it. But not all the licenses allow that and even some shows called "Netflix originals" may have restrictions if they're actually made by someone else. TechCrunch points out that Warner Brothers owns the licensing to "You", Universal owns "Russian Doll" and Sony produces "The Crown" and "Cobra Kai." The Wall Street Journal says Netflix is in talks with all three of those companies about new deals. Co-CEO Ted Sarandos said Netflix “will clear some content, but certainly not all of it” by the time the new tiers launch but added, "the vast majority of what people watch on Netflix we can include in the ad-supported tier."
Another change is Netflix talking ratings. The company cited a Nielsen's estimate that Netflix made up 7.7% of all US TV viewing in June. That's 1.334 trillion minutes, making Netflix the most viewed TV service in the US, well-ahead of second place CBS at 753 billion minutes. CBS is the number one broadcast network in the US right now.
Co-CEO Reed Hastings said “It’s definitely the end of linear TV over the next five to 10 years.”
The company also addressed suggestions that it might do better if it released episodes on a weekly schedule like most other outlets do. Netflix said it likes the freedom of not having to do theatrical releases, and likes letting customers chose how to watch a series. It considers these to be "a significant long term business advantage.”
And finally Netflix announced it had acquired Australia's "Animal Logic" animation studio which has made films like Happy Feet, The Lego Movie and more.