While being honored at the Banff Film Festival in Canada in early June, Netflix’s head of global television, Bella Bajaria, was surprised she didn’t say. Despite the recent turmoil at streaming giants, including the loss of subscribers, the reduction of hundreds of jobs, and the sharp drop in inventory, she’s important to change her programming efforts as Netflix is charged ahead of schedule. He said he had no plans.
“For me, when I see it, the business goes well,” Bajaria said from the stage. “We haven’t made any fundamental changes to our business. We haven’t merged. There are no major transition stages.”
Two weeks later, after Netflix fired another 300 people, Reed Hastings, the company’s co-chief executive officer, doubled Bajaria’s message, and the future is actually bright for the rest of the employees. I was relieved that the next future would be bright. In 18 months, the company will employ 1,500 people.
Some in the entertainment industry replied: is it?
For years, Netflix has been Hollywood’s leading innovator, revolutionizing the way people around the world watch movies and television. Currently facing the loss of subscribers for the first time in 10 years, more loss is expected this year, but Netflix’s main response is efforts to crack down on password sharing between friends and family and the introduction of lower passwords. Seems to be. -Priced advertising layer. In Hollywood and Wall Street, there are concerns that these moves alone are not enough.
“I think both advertising and password sharing are great incremental revenue opportunities that should generate more subscriptions or more revenue,” said media analyst Richard Greenfield. “But these two Neither is Netflix’s savior. Netflix’s savior is spending $ 17 billion on content, and all that is needed is to increase “Stranger Things” and decrease “Space Force.” “
Netflix surprised the entertainment industry in April when it announced that it would begin displaying ads on its platform. If this sacred belief was shattered — Hastings had long promised that Netflix would never display commercials — what’s next? Is there a serious push to the cinema? Perhaps the change to the show’s debut rhythm has changed from the Netflix-invented all-at-once binge model to a weekly release schedule to raise the buzz and word-of-mouth expectations? Does Netflix take a very different approach to programming?
But two months after the ad was announced, Netflix announced that there were no other major changes. With a few exceptions, the show is still released at once. The latest season episodes of “Welcome to Ozark” and “Stranger Things” are now available in two batches this year, more than a month apart. According to two people familiar with the conversation, Mr. Bajaria told the talent representative that her company was more or less sticking to her leading programming strategy when she took office in 2020. I did. This means a more traditional development process where Netflix executives often request scripts before ordering a new series. Netflix has also fired about 450 full-time employees in the last six weeks, with no senior programming executives. This is further evidence that the company remains committed to key decision makers.
Netflix takes advantage of the opportunity to shed light on ambitious content, pay for shows that believe in celebrity appearances, and give great freedom to renowned directors such as Spike Lee and Martin Scorsese. Has reached more than 221 million subscribers worldwide. The attitude of staying in the course these days raises concerns that companies known for their entrepreneurial spirit are moving away from that strategy at a time when better service is offered by devoting themselves to it.
This can be seen, for example, in a company’s marketing budget. In 2019, Disney + and Apple TV + were just getting started, and Netflix spent $ 2.6 billion on marketing when HBO Max didn’t exist. In 2021, we spent $ 2.5 billion when competition intensified significantly.
Competition to dominate streaming TV
Most Netflix shows appear on the service with relatively little external promotion. And streamer movies still only receive the nominal theatrical release. For example, the expensive summer blockbuster movie The Gray Man, starring Ryan Gosling and Chris Evans, debuted in some theaters on July 15th and will be released on Netflix a week later. And, according to the two who are familiar with the discussions between Netflix and exhibitors, there is currently no lively negotiations on other potential theater-only releases. The long-awaited sequel to “Knives Out,” due out later this year, will appear on Netflix following its debut at the Toronto International Film Festival. It seems unlikely that there will be an exclusive large-scale theater release. Netflix declined to comment on its theatrical strategy.
However, as Netflix struggles to find new hits comparable to Stranger Things and The Crown, corporate executives are much more sensitive to the bad reviews that have appeared frequently these days. It has become. (New content such as the movie “Spiderhead” and series “God’s favorite idiot” Producers using Netflix said the word “quality” is used more often at development meetings.
Emily Feingold, a Netflix spokeswoman, focuses on program quality by referring to a variety of content, including movies such as “Squid Game,” reality television shows “Too Hot to Handle,” and “Red Notice.” He challenged the idea that it was somehow a strategic change. And “Adam Project”.
“Consumers have very different and diverse tastes,” Feingold said. “So, regardless of genre, we are always investing in such a wide range of stories with the aim of creating the best version of that title. Diversity and quality are the keys to our continued success. . “
Producer Todd Black said the process of developing a project on Netflix was slowed down, but otherwise it was a normal business. “They see everything I’ve gotten,” said Black, who last worked at Netflix when he made “Ma Rainey’s Black Bottom” in 2020. We have to be patient and let them do that. But they are open for business. They are buying things. “
Indeed, the company will spend about $ 17 billion on content this year as well. Last month, he paid $ 50 million to David Yates’ thriller (“Harry Potter and the Deathly Hallows”) starring Emily Blunt. Then, after director Joe and Anthony Russo (“Avengers: Endgame” and “The Gray Man”) made a $ 200 million movie called “The Electric State,” Universal Pictures barked at that price. Millie Bobby Brown and Chris Pratt will be starring. Tag. The company has also just announced a development agreement for the TV adaptation of “East of Eden” starring Florence Pugh.
On Tuesday, research firm Whip Media said Netflix fell from second to fourth in its annual streaming customer satisfaction survey, behind HBO Max, Disney + and Hulu.
The most important change to Netflix is the advertising tier. We want to deploy this by the end of the year, as we told our employees. At the industry’s annual conference in Cannes last week, Netflix’s advancing into advertising aroused excitement among media buyers.
“It was pretty intense,” said Dave Morgan, CEO of Simulmedia, a company working with advertisers and attending the meeting. “It was one of the top two or three issues everyone was talking about.”
Hastings said Netflix will partner with external companies to help start the early advertising business. The Wall Street Journal reported that Google and Comcast are good candidates to become its partners. Still, advertising company executives believe that building a business on Netflix can take some time, and the company may be able to introduce a new tier to only a few international markets by the end of the year.
It may take longer for advertising to become an important source of revenue for the company.
“You have many media companies that are fooling it, and it will take a considerable amount of time to compete with those companies,” Morgan said. “I think it will take three or four years to be in the top 10 video advertising companies.”
In this month’s analyst report, Wells Fargo cast cold water on the idea that the number of subscribers in the ad-supported segment is growing fast. Wells Fargo analysts warned that the advertising model would bring “moderate” economic benefits over the next two years due to natural cannibalism from a high subscriber base. By the end of 2025, they predicted that nearly one-third of the subscriber base would pay about 100 million users, a cheaper ad support model.
Bank of America went a step further last week. “Advertising stratification can serve as a way for consumers of all income groups to increase their streaming budget by trading down to subscribe to additional services, and far more Netflix competitors than Netflix itself. It benefits other companies, “said an analyst’s letter.
Netflix has also contacted studios that have been buying TV shows and movies for the past few weeks, seeking permission to display ads on licensed content. In negotiations with Paramount Global, Netflix said it had an existing license rather than reducing the company with revenue from future ad sales, according to someone familiar with the issue spoken on anonymous terms to discuss ongoing negotiations. Mentioned paying in addition to fees.
This reflects the approach Netflix took in the studio when it introduced the “download” feature. This feature allows users to save movies and TV shows to their devices for offline viewing. When Netflix added that feature, streaming service executives agreed to pay the studio in addition to the license agreement.
But after all, Netflix’s success is likely to depend on how well it spends its $ 17 billion content budget.
“Netflix needs to be better, dollar-to-dollar, and that applies to Ted Sarandos and his entire team,” Greenfield said, referring to the company’s co-chief executive officer. “They aren’t doing enough work, yet they are still far more leaders.”
Benjamin Marine Report that contributed.
