The company has been trying to expand its user base for some time. One of the most controversial steps has been to opt out of sharing passwords, and a cheaper subscription option containing ads has also been suggested. The goal of both actions is clear: to increase the company's revenues and generate more profits.
Now it seems that Netflix is preparing for a more serious step through which it can attract a lot of new subscribers.
Based on information from Bloomberg, the company is considering free access in Europe and Asia, accompanied by ads of course, which may seem a more attractive offer to many than a cheap subscription package.
Interestingly, this model was already tried in Kenya, but the trial was abandoned at the end of 2023. Management is now analyzing the trial of this, considering whether it would be beneficial to scale the change to larger markets. It is important to note that there is no final decision yet, as Netflix is currently in the planning stage.
This move will have two advantages: on the one hand, it will also attract users who cannot afford the subscription yet, and on the other hand, by selling advertising time, the company can significantly increase its revenue. And yes, there is room for improvement in this area: According to Bloomberg data, Netflix earns $0.4 billion annually from video advertising, while YouTube earns $13 billion, Disney $8.7 billion, and Amazon $1.1 billion in this area.
In order to increase revenue, Netflix entered into a partnership with Microsoft. Under the agreement, the Redmond company will bring more video advertising to the platform, which in return can immediately welcome a large number of customers to its new business.
In the USA, the ad subscription is $6.99 per month (about 2,600 HUF), while the cheapest standard package for a single account is $15.49 (about 5,700 HUF). At home, the cheapest package currently costs 2,490 Hungarian forints, which is cheaper than the ad version there, which is why the ad version “should” be offered for free on the Old Continent.
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source:
Bloomberg
Image source(s):
Getty Images
