Content creators are clear: if there is a new plan with ads and more investment in video games on Netflix, the income that their creations now generate thanks to advertising should be shared equally.
After the launch of Netflix’s ad -supported plan that has given us so much play in 2022 and that implies, from November 10, for €5.49 per month, accessing its content (although not all) with advertising, the streaming platform has open season for creators to demand a bigger share of the pie.
Netflix launched its service with advertising to compensate for the slowdown in subscriber growth, although it has been of little use, since we are talking about almost zero reception. For example, in the United States we talk about only 9% of Netflix subscribers having opted for the new “Basic with Ads” plan.
“A show that does well will have more advertisers and more revenue for Netflix. Therefore, our clients who created that show need to be compensated for that additional revenue ,” explains Jeremy Zimmer, director of United Talent Agency, one of the agencies where Most of the creators of Netflix content come out.
It further says that Netflix’s ad-support service has “changed all the rules [by saying] it’s no longer an ad-free environment. A different revenue stream is coming in that they said wasn’t going to be there.”
Content creators vs. Netflix and its extra income from increased advertising
Netflix, of course, has long resisted profit-sharing deals with content creator agencies for its platform.
However, according to Zimmer, the previous standards were tied to an ad-free platform. “This gives the company a different source of income than the one it said it wasn’t going to have,” she says. In short, the game has changed so the rules attached to it should also be changed.
If we talk about a greater increase in the views of series such as Wednesday, which has generated so much success, those who enjoy the series while subscribing to the “Basic with ads” Plan will generate more income for the platform, so this should be better distributed the benefit.
Taking all this into account, it seems that we are forgetting another big section of Netflix, video games. And it is that, as you already know, 2022 has been quite a commitment to this sector.
Netflix has fewer development studios compared to companies like Microsoft and Sony, that’s true, but the deals point to Netflix’s emerging strategy as it tries to catch up with its competitors.
In addition, something that has surprised us and that has already been put on the table is that, in the face of 2023, we could be participants in how Microsoft, in a continuous buying streak, finally takes over Netflix, as explained in its Reuters predictions.
Netflix already announced in July 2022 that it was going to choose Microsoft as an advertising partner for its new ad-supported subscription service. That is, Microsoft will advertise its technology on the platform. However, it seems that this partnership could become something else in 2023.
To this we must add one last novelty reported by our colleagues from Hobby Consoles:Sony Interactive Entertainment could be working on a cloud gaming system that could be integrated into streaming services such as Netflix and YouTube.
Of course, Netflix’s ability to adapt new series and movies to its environment is one of the main reasons for its success. The founders are well aware of their value proposition for each customer segment and, furthermore, we have already seen that the company has the right partners and that they help it grow.
The new pricing strategy will ultimately determine the success or failure of the business. Striking a balance between a profitable price and what customers are willing to pay for your products or services, as well as satisfied creators, is quite a challenge.
However, according to a report from last April, Netflix lost 200,000 users after raising its price at the beginning of the year. It is the first time this has happened since 2011. The streaming service has continued to lose another 2 million subscribers in the following months, which has led to its worst year in history (2022). Shares have plunged by as much as 60%.
The reasons for this loss are several, including strong competition from other companies, the inability to expand in some territories due to technological limitations, the war between Ukraine and Russia, and account sharing.
Netflix, for its part, is not giving up yet. The company intends to recoup its losses with its “Basic with Ads” subscription plan, although it must first get around this huge problem that it faces. After all, the platform is nothing without quality content.