Last year, the company said it already saw a higher revenue per customer on its ad-supported plan, as opposed to its $15.49 ad-free plan, which means its $11.99 per month basic plan likely isn\u2019t doing much for Netflix\u2019s bottom line. During an earnings call this week, co-CEO Greg Peters said the company\u2019s top priority in its advertising business is \u201cscale.\u201d To Netflix, that means \u201cmaking the ads plan more attractive\u201d and \u201cshifting our plans and pricing structure and other places where we think it\u2019s appropriate.\u201d<\/p>\n<\/div>\n
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Then there\u2019s Netflix\u2019s $5 billion deal for WWE Monday Night Raw<\/em>. Sources tell CNBC that Netflix won\u2019t show ads during Raw<\/em> for subscribers to its ad-free tier. If true, users on Netflix\u2019s $6.99 plan would still have commercials during the three-hour-long show, creating yet another revenue driver for the streamer.<\/p>\n<\/div>\n\n
\u201cWWE content is used to a younger demographic that allows Netflix to reach perhaps portions of the greater audience that it will not be able to reach through lower price alone,\u201d Paul Erickson, the founder and principal of Erickson Strategy & Insights, tells The Verge<\/em>. \u201cWhen viewed against their other recent move to eliminate the lowest priced ads-free tier, I would say that they are looking to, much like the rest of the industry\u2026 improve their bottom lines.\u201d<\/p>\n<\/div>\n\n
And Monday Night Raw<\/em> isn\u2019t your traditional type of sports broadcast \u2014 it\u2019s \u201csports entertainment,\u201d as Netflix co-CEO Ted Sarandos put it on the company\u2019s last earnings call. That\u2019s a plus for Netflix, according to Erickson, because it increases engagement, meaning \u201cpeople who watch it tend to keep watching.\u201d Erickson also points out that, unlike traditional sports, WWE isn\u2019t seasonal, so Netflix can keep streaming it throughout the entirety of the 10 years it signed up for \u2014 and users interested in watching will stay subscribed without offseason breaks that can prompt cancellations.<\/p>\n<\/div>\n\n
All of these changes add up to a very different Netflix than the one we saw a few years ago. Netflix isn\u2019t being shy about what it\u2019s doing, either, in part because it can\u2019t<\/em> be. After years of vying for subscribers, streaming services now need to prove that they\u2019re actually profitable. That has led streamers \u2014 not just Netflix \u2014 to issue price hikes and combine their services into a singular app, like Max and Disney Plus with Hulu. \u201cNetflix is very aware of the fact that they\u2019re one of the very few must-have streaming brands for a lot of households,\u201d Erickson says. \u201cThey need to keep that title as a must-subscribe service even in the face of aggressive competition.\u201d<\/p>\n<\/div>\n\n
Netflix is no longer synonymous with streaming partly because it\u2019s not the only game in town anymore. But even the Netflix that exists today is a far cry from what it once was, and it\u2019s bound to keep pushing further away from that original vision. That ideal of a streamer was buoyed by an ever-rising stock price, which has since come back down to reality. As for what that future means for streaming \u2014 whether it will soon become a mixture of live and on-demand content with ads \u2014 one thing is clear: Netflix\u2019s rapid evolution is allowing the company to stay ahead in a more competitive industry than ever, and there\u2019s no turning back from here.<\/p>\n<\/div>\n<\/div>\n