Netflix is betting that a cheaper, ad-laden version of its streaming service will help maintain its appearance as the company continues to grapple with unprecedented subscriber loss. But Biden’s failure puts another hurdle in the company’s path: a massive slowdown in ad spend that has already hurt other publishers.
Advertising spending is falling as companies cut marketing in the face of record inflation and general consumer pessimism. As families are forced to save pennies due to rising gas and food prices, companies are rethinking buying higher-priced television and online advertising.
For Netflix, whose executives are campaigning with enthusiasm and pouring millions of dollars into Joe Biden’s 2020 presidential campaign, the timing couldn’t be worse or fairer.
The publisher plans to launch a new ad-supported tier in less than a year in early 2023. No pricing information yet, but it’s expected to be cheaper than Netflix’s cheapest service, which costs $9.99 per month in the US.
Roku reports “significant slowdown in TV ad spend” in the second quarter. Roku, which offers its customers a free, ad-supported channel, attributed its weak financial results to a hit or two in consumer spending followed by cuts in ad spending.
In a message to investors, Roku said, “We expect these concerns to continue in the near future as economic issues weigh on markets around the world.” Said.
Other Silicon Valley giants were also hit by ad woes, including YouTube, whose ad revenue rose 4.8% year-over-year in the second quarter; It’s been the slowest since parent company Alphabet began publishing this data.
Facebook’s parent company, Meta, has worsened over time, reporting its first quarterly revenue decline. The company’s income is largely dependent on advertising.
Netflix has long resisted the promotion of ads, but the publisher has lost more than 1 million subscribers in the last two quarters; this was unthinkable less than a year ago. The company’s stock has dropped more than 60 percent this year, causing executives to lay off hundreds of employees and curb the publisher’s notoriously wasteful spending habits.
Source: Breitbart
