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Editor's Choice

Can advertisements essentially save Netflix?

Netflix has been a disruptive entity in the market ever since its inception. Following its humble beginnings when it sold online DVDs, Netflix became a trailblazing entity in the market when it revolutionized the concept of online streaming. Shunned by one and all, a victim of Hollywood snobbery, Netflix remainder dauntless in its quest and soon set up a Studio which began producing Original content. After a nearly 25-year run, the streamer is at the top of the streaming wars and has become an exemplary icon in the entertainment industry.

After being a sensational phenomenon for decades, Netflix witnessed an unexpectedly sharp rise in subscriptions during the coronavirus pandemic in 2020. Besides producing top-quality content like Squid Game, You, Sex Education, Money Heist and more such titles, the Original films performed extremely well, namely The Power of the Dog, Don’t Look Up, and Red Notice, among others. 2021 amassed a massive revenue for the streamer, and Netflix geared up to conquer markets in lesser-tapped areas, namely India and Africa, while churning out a larger amount of content.

This proved to be a massive mistake. Their drive for quantity over quality costs them heavy. While they invested heavily in several productions simultaneously, viewership began to go down. Subscribers were displeased with the quality of shows and films, which felt repetitive, dull and drab. To make up for the production cost, the streamer increased subscription prices considerably in the United States, the United Kingdom and Ireland, Australia and Canada, promising to deliver better titles which they, unfortunately, could not. They also threatened to monitor password-sharing and put a stop to multiple people using the same account, which is absolutely hypocritical by refuting their own Tweet a few years back.

Meanwhile, when Russia suddenly attacked Ukraine leading to a global humanitarian crisis, various companies imposed personal sanctions on Russia, withdrawing from the Russian market. Netflix was already in trouble with the government when it refused to air Kremlin propaganda. After imposing sanctions of their own by stopping Russian productions and the streaming service, they lost the entire base of Russian subscribers, who also filed a legal suit against the company.

Within the first quarter, the streamer lost more than 200,000 subscribers, which was a massive blow along with the falling stock prices. They are projected to lose nearly two million subscribers in the next quarter. Netflix’s titanic ambition finally led to its gradual sinking, leading the streamer to desperately lay off employees, axe down less-successful productions and look for life support.

Currently, the streaming market is extremely saturated. Just like social hierarchy, the wealthy eat the poor- the streamers with the fattest wads of cash can acquire the best films and other titles and subsequently win in terms of viewership and other business aspects. Netflix always prided itself on how it managed to provide a seamless, ad-free experience to all its viewers. However, to survive the race, it seems like the streamer will have to resort to ad-based subscriptions to sustain themselves.

Platforms like Disney, Amazon Prime and Roku are classic examples of ad-based streamers. Although they have tiny ads that feature on the screens, the subscription price is relatively low. Roku increased its revenue way quicker than Netflix ever did. If Netflix introduces a pretty low-cost, ad-supported plan and garners about 100 million non-user subscriptions where they receive an ad revenue of $40 per user (Roku), they will accumulate an additional revenue of $4 billion. Once they accrue this extra amount, they might as well forgo password sharing for more people would be inclined to subscribe to a low-cost plan.

While users are at war on Twitter bashing Netflix, nothing but advertisement revenues can save Netflix from its impending doom!

(Credit: MaxPixel)