Beautiful Virgin Islands

Saturday, Jan 28, 2023

Netflix: $11.5bn wiped from streamer's stock market value as ad funded service gets off to bad start

Netflix: $11.5bn wiped from streamer's stock market value as ad funded service gets off to bad start

One might have thought, to judge from the acres of newsprint and hours of airtime devoted to its documentary about the Duke and Duchess of Sussex, that this would be a boom time for Netflix.
Not so.

Shares of the streaming giant fell by more than 8% this afternoon, wiping $11.5bn from its stock market value, on a report that its new advertising-funded service has got off to a poor start.

Digiday, a specialist publication that covers the digital media market, reported that audiences for the service have fallen short of the numbers that Netflix guaranteed advertisers.

It said, quoting five advertising agency executives, that audiences had only been around 80% of the numbers promised to advertisers in some cases and that, as a result, Netflix was offering them refunds on adverts yet to run.

Reporter Tim Peterson quoted one ad agency executive as saying: "They can't deliver. They don't have enough inventory to deliver. So they're literally giving the money back."

The article said that Netflix had been selling ads on a so-called 'pay on delivery' basis: in other words, advertisers only pay the company for viewers who actually watch their adverts.

It said that Netflix has been charging more, per numbers viewing adverts on its platform, than rival Disney+ - which briefly overtook Netflix earlier this year as the world's biggest streaming platform.

The company has been charging $65 for every 1,000 viewer impressions while Disney+ has been charging $50 for the same number. Digiday said that Netflix has since cut its price to $55.

The article added that, in some cases, advertisers had not been taking a refund but instead rolling over their ad spend to the first three months of next year in the hope that Netflix can build a bigger audience over time.

Other advertisers, though, have sought refunds so they can deploy their ad spend elsewhere during the crucial Christmas season.

The streaming wars

Netflix launched its new ad-funded service last month - seven months after first announcing it was thinking about the idea - in a bid to bolster its revenues.

The company shocked Wall Street when, in April, it announced it had suffered a fall in subscriber numbers during the first three months of the year.

The ad-supported service, which Netflix promised would carry just four to five minutes worth of advertising per hour, was launched in the US with a monthly subscription fee of $6.99.

Other streaming platforms, including Disney+, Hulu (which is jointly owned by Disney and Comcast, the parent company of Sky News) and HBO Max, which is owned by Warner Bros Discovery, are expected to charge more for their ad-funded services.

Wall Street is currently watching keenly to see whether Disney+ changes the price of its services more broadly following the dismissal last month of Bob Chapek, its former chief executive, who was replaced by his predecessor Bob Iger.

Digiday said that, while Netflix had struggled to meet its existing promises to advertisers, it was still seeking for ad deals for next year.

Separately, Netflix shares have also come under pressure after downbeat comments from one of the company's sternest critics on Wall Street.

Laura Martin, analyst at the investment bank Needham & Co, said that she eventually saw the business being overtaken by its competitors and eventually losing customers to them.

She told clients in a note to treat the shares "with caution" and added: "We see Netflix at a competitive disadvantage…because it doesn't own a bundle to lower churn in the US and it has largely saturated its offshore [total addressable market] already."

Today's decline in Netflix shares means that they have fallen by more than 51% so far this year - although they have rallied by some 60% since hitting their year's low in early May.
Newsletter

Related Articles

Beautiful Virgin Islands
Close
0:00
0:00
Tesla reported record profits and record revenues for 2022
I have a dream, MLK inspiring speech
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Aretha Franklin, Marvis Staples - Oh Happy Day
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
BVI Freedom Song
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Billy Preston - You Can't Beat God Giving (Live)
Who’s Threatening Israeli Democracy?
VIRGIN ISLANDS REGGAE CARIBBEAN RIDDIMZ
Federal Reserve Probes Goldman’s Consumer Business
Oh Happy Day Edwin Hawkins - Anthony Brown w FBCG Combined Choir
China's first population drop in six decades
'Stand by Me' performed by Karen Gibson and The Kingdom Choir
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
National Anthem of the British Virgin Islands - Oh, Beautiful Virgin
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Hello Dolly
Tesla slashes prices globally by as much as 20 percent
for KING & COUNTRY - Amen (Reborn) [feat. Lecrae & The WRLDFMS Tony Wi
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
Bob Marley - Get Up Stand Up
After Failing To Pay Office Rent, Twitter May Sell User Names
Yes He Can
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
What A Friend We Have In Jesus
FIFA president questioned by prosecutors
Unforgettable
Britain's Sunak breaks silence and admits using private healthcare
Touch The Hem Of His Garment
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
The Lord's Prayer
Saudi Arabia set to overtake India as fastest-growing major economy this year 
THE GOD MOVEMENT...BEAUTIFUL BVI
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
Siyahamba
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
Ray Charles And The Voices Of Jubilaton, Oh, Happy Day
TikTok CEO Plans to Meet European Union Regulators
Ramblin' Rose
UK chaos: Hong Kong emigrants duped by false prospectus
Protoje - Who Knows ft. Chronixx
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Pressure - Virgin Islands Nice
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Phil Wickham - House Of The Lord
Will Canada ever become a real democracy?
My God Is Real (Yes, God Is Real)
Hong Kong property brokerages slash payrolls in choppy market
The Lion King Circle of Life by LEBO M. — LIVE at the HAVASI Symphonic
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Louis Armstrong - When The Saints Go Marching In
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Kanye West Sunday Service - hallelujah, salvation, and glory
Coinbase to Pay $100 Million in Settlement With New York Regulator
Jonathan Nelson - I Believe (Island Medley
FTX assets worth $3.5bn held by Bahamas securities regulator
From The Virgin Islands Sqad Up
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Common, John Legend - Glory
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Anthony Evans vs. Jesse Campbell - If I Ain't Got You
Hong Kong to scrap almost all its Covid rules
I have a dream, MLK inspiring speech
EU calls screening of travellers from China unjustified
Aretha Franklin, Marvis Staples - Oh Happy Day
US imposes Covid testing for visitors from China
BVI Freedom Song
×