Netflix Alami Customer Growth, Planning For Advertising Business Expansion On TV Services

Illustration Photo dock. Netflix

JAKARTA - Netflix has just reported revenue in the fourth quarter (Q4) of 2022 which managed to annex 7.85 billion US dollars equivalent to Rp118 trillion. But this figure has decreased from the previous quarter.

In comparison, the company has made 7.93 billion US dollars in Q3 and 7.97 billion US dollars in Q2 the same year. However, Netflix managed to surpass 230 million global subscribers, up from 223.09 million thanks to an additional 7.7 million subscribers.

The company relies on its advertising business to become a huge source of revenue. Overall, it is expected to generate $8.17 billion for Q1 2023.

Furthermore, Kantar data shows Netflix Basic with Ads subscription plans now account for 12 percent of its subscriber base. While Netflix hopes with it to attract new subscribers, it seems that only a few current subscribers are swapping into $3 packages per month.

In a letter to shareholders yesterday, Netflix stated, the launch of its advertising support level was successful. However, the company admits there is still much to be done.

It is likely that more customers will consider cheaper packages when the company adds all of its content to the package.

In addition, advertising-supported packages are not available in any region. Basic with Ads are only available in the US, Great Britain, France, Germany, Spain, Italy, Australia, Japan, Korea, Brazil, Vanada, and Mexico.

The company is not planning to expand in the near future, but is likely to target a larger ad market.

Overall, the company admits 2022 was a gloomy year. The streaming giants experienced two painful quarters in 2022, losing more than a million global subscribers.

"We believe we have a clear path to accelerating our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing, and building our ad offerings," Netflix said.

Next Netflix Strategy

During yesterday's earnings call, Netflix co-CEO Ted Sarandos said the company would consider an ad-supported TV option (FAST), a move that media companies now take a lot as many consumers switch to FAST services.

"We are open to all the different models out there right now, but we have a lot on our plates this year, both with paid sharing and with the launch of our ads and continuing the list of content we are trying to direct to our members. So, we will definitely oversee that segment," said Sarandos.

While the Netflix FAST channel offer may not happen anytime soon, Sarandos does not rule out the possibility that there will be offers in the future. If Netflix uses the FAST option, the move will most likely increase its ad business significantly.

According to nScreenMedia quoted from TechCrunch, Saturday, January 21, the FAST industry will reach 216 million monthly active users by 2023, pushing ad revenue of 4.1 billion US dollars.

However, Netflix is known to be slow in following industry trends. It took years for former co-CEO Reed court, who recently announced he would resign, even to consider launching a cheaper advertising support plan.

Hulu is the third oldest streaming service after Netflix and Amazon Prime Video which have offered advertising rates for more than a decade.