Netflix admits to missing out on a large customer segment and now wants to target an audience that sees the current package as too expensive and doesn’t mind watching ads.
At the Cannes Lions advertising exhibition, Netflix co-CEO Ted Sarandos confirmed plans to launch a low-cost package, containing ads. Netflix wants to target audiences who see the current package as too expensive and don’t mind watching ads. Sarandos admits to missing out on a large customer segment.
Netflix is in talks with ad sales partners. Although Sarandos did not disclose details about when the new plan will be launched, the company has told employees about its goal before the end of the year.
Currently, Netflix has a Basic package for $ 9.99 / month, 480p quality, Standard package for $ 15.49 / month, 1080p quality. The most expensive plan, Premium, $19.99/month, 4K HDR quality. Netflix is the only streaming service that charges a fee according to the quality of the stream. The package with ads can provide the same streaming quality as the Basic package.
In addition to the package with ads, Netflix intends to handle account sharing. In some countries, the company is experimenting with collecting extra money for people who share a Netflix account with someone who doesn’t live in the same house.
In the first quarter of 2022, Netflix said, for the first time in 10 years, the platform experienced a drop in subscribers. Revenue growth slowed significantly, due to “most households sharing accounts” and “competition”. Netflix estimates 222 million households are sharing accounts with 100 million other households. Netflix confirmed it will add “more effective ways to make money from sharing between households” in the future.
Sarandos believes that Netflix can grow again with predetermined changes. They have enough size, profitability, and cash flow to continue to grow the business.
Source: MacRumors
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