The increase in the offer available to its users will lead to a probable further increase in the cost of subscriptions: to anticipate what could happen to Netflix during 2024 they are the leaders of the platform.
This is what can be understood from the content of the documentation presented to shareholders on the occasion of the earnings report for the fourth quarter of 2023: a positive report also given by the great success of the “ad-supported” offer. The plan is to increase the offer for subscribersbut this should consequently lead to asking them for a greater effort from an economic point of view.
“Over the past few years, we have increased the sophistication of our pricing and the strategy of our plans so we can more effectively capture the value created by our service”, said co-CEO Greg Peters, underlining the success of the “ad-supported” model for Netflix. Subscribers who opt for this solution, in countries where advertising options are available, make up 40% of new subscriptions (they were 30% in the third quarter of 2023).
This is why the first step will be to definitively replace the less profitable plan “ad-free” to favor the one with advertisements by mid-2024. Netflix has anticipated its intention to gradually eliminate the Basic level in the coming months: goodbye therefore, it is expected by next spring, to the basic option without advertising in Canada and the United Kingdom United.
What favored the growth in the number of subscribers, Peters explained to shareholders, was the strategy of introducing promotional bundles, encouraging users to move to the advertising level after a totally free initial period. Clearly the lower cost of the “ad-supported” level is an incentive to continue down that path.
But apparently it doesn’t end there, given that the platform is ready to expand its streaming offer, not without further sacrifices for customers. We start from one of the innovations that have recently caused the most sensation, namely the acquisition of the broadcasting rights of what is considered to be WWE’s flagship show (wrestling), namely “Monday Night Raw”. Another aspect we are focusing on is the world of gaming, with the upcoming launch of a service dedicated to cloud games.
“As we invest in and improve Netflix, we will occasionally ask our subscribers to pay a little extra to reflect those improvements.”anticipate the top management of the company: new price increases are therefore on the horizon, and perhaps not too far away although not precisely defined.