Netflix kills Basic plan, making its cheapest ad-free tier $15.49

If you already have the $9.99 Basic plan, you can keep it.

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[jjmorris2000]

There you have it folks. Your eyeballs are worth more than $8.50/mo -- no wonder they're so hungry to get people to get used to ads. If they can get you to crack the door, they can slowly raise prices and also get that sweet sweet ad revenue.

Yup. The ad business is huge money. Not the least because ad buyers pay ridiculous amounts of money for ads time.

With subscribers the amount of money you can make is cost of subscription x # of subscribers and you have a limited number of prices you can charge subscribers. With ad revenue the amount of money you can make is limited only by the number of companies who value your access to eyeballs.

I expect to see them to introduce an ad-supported cheaper version of the Standard Plan the next time they need to show revenue growth and try to move Standard Plan customers onto it.

 

[jjmorris2000]

Thing is, Netflix is living on borrowed time. They've been trying to pump out original content for a while, but ultimately they don't have the gravitas of Disney/Paramount/HBO/etc to keep people engaged and the sweetheart deals on licensing are long behind them.

See, I think it's exactly the opposite. Execs at Disney, Warner, and Paramount screwed up their own streaming service rollout hard. They all are losing money and their shareholders aren't in it for the long haul, so they are already pulling content off their services and looking to try to sell the rights to stream it to other players to try to recoup the massive black holes of debt they dug for themselves. Meanwhile Netflix is turning a a profit. For all of the studios streaming is a cost sink that loses them money and tangential to their core business. For Netflix streaming is their core business and development of new shows is tangential.

Netflix just needs to weather the storm of the studios all thinking they can out-Netflix Netflix. That's why they had to move into creating original content in the first place - because they could see all of the studios moving into their territory and cutting them off from the shows they needed to keep their service running. With the idiot CEOs of the studios finally waking up to realize that there is no way that they can actually make their streaming services profitable in the short term, they're waking up to needing to have someone to pay them for their shows. And Netflix is right there, ready to hand over cash in exchange for streaming rights.

 

[jjmorris2000]

For Wall Street it is not about quality, it is about how much you can get out of the masses.

I cancelled it in February and I take every wallstreet analysis with a rock of salt.

It's not even that - it's about their perception about how much the company is going to pay off, whether their perception is actually grounded in fact or not is another story.

And that's why the ad model is so attractive to Netflix and other streamers. With subscriptions any wall street analyst can take the subscriber numbers, multiply them by the cost of a subscription, and see exactly how much revenue the company is expected to bring in.

But with ad revenue only the company itself knows how much the companies buying ads are paying and how much they're paying per impression (or whatever metric they use). And that means it's harder for wall street types to easily predict the target numbers before the company wants to announce them. Puts more power into the hands of the company when it comes to controlling the narrative around their stock price.

(Also you can make a lot more money on ads than you can on subscriptions if you have a large enough base of eyeballs to show them to. Companies that buy advertising generally just throw money at media companies that have a large number of viewers/subscribers/etc.)