“Anyone interested in Netflix knows that I’ve always opposed complex advertising ties and that I’m a strong supporter of making subscriptions as easy as possible,” Hastings said. “And while I still prefer it, I’m even more in favor of consumers having a choice,” he told analysts after the results were released. According to him, Netflix perceives that some subscribers do not mind advertising.
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Hastings warned that if Netflix opts for a cheaper subscription, it will not be immediately, but probably in a year or two. A new ad-supported subscription could provide Netflix with solid profits. The company said on Tuesday, together with its financial results, that it had lost its clients for the first time in more than ten years.
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Netflix’s net first-quarter profit fell 6.4 percent to $ 1.6 billion (approximately $ 36 billion). Revenues increased by almost ten percent to $ 7.87 billion (CZK 177.6 billion), but fell short of analysts’ expectations. Netflix shares fell about 25 percent in response to the results and the outlook.
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Netflix said it was facing increasing competition from newly launched streaming services from traditional entertainment companies. However, the total number of subscribers is also affected by the massive sharing of passwords, high inflation and the ongoing invasion of Ukraine by Ukraine. Netflix is leaving the Russian market because of it.
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Expenditures have risen
In an effort to attract new customers, Netflix, for example, has increased spending on new products, especially original television. In order to pay for it, he increased the price of his service. The company said price changes were helping it increase revenue, but that they were largely responsible for the loss of about 600,000 subscribers in the United States and Canada over the past quarter.
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A cheaper ad-supported subscription could help Netflix retain that part of the customer who cares about price. At the same time, it could be a new opportunity for Netflix to secure additional revenue.
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“It simply came to our notice then. Disney does it, and they did it in HBO, ”Hastings admitted, according to CNBC. “I don’t think there’s much doubt that this is the case,” he added.
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