The business end of Netflix is experiencing some dismay of late, with $11.5 billion being wiped from the streaming service’s stock market value.
The fall of more than 8% in stock market value is thought to have come from the recent poor launch of the advertising-funded service. According to Digiday, a publication that covers the business end of the media market, audience numbers have fallen short of the figures Netflix guaranteed to advisors, leaving them in quite a sticky situation. As a result, the publication reported that the streaming service was offering refunds to advertisers.
“They can’t deliver. They don’t have enough inventory to deliver. So they’re literally giving the money back,” one ad agency executive stated in the report by Tim Peterson.
A second agency executive corroborated these findings, stating, “Pacing was well below expectations, so some advertisers pushed for money back now so we could spend it in the critical holiday time period, and they deserve credit that, in the vain of partnership, [they] have agreed”.
Netflix has long proposed launching a version of its streaming service with advertisements, with the long-term projections of such a venture being undoubtedly promising. The streaming service’s ad revenue is expected to reach $4.6 billion by 2025, totalling an overall revenue of $42.4 billion, though this could indeed drop significantly if subscribers don’t take to the change in Netflix’s interface.
In further expansion efforts, Netflix has also piled cash into its gaming platform, which has gained in popularity over the past 12 months.
