in Netflix-Akt (WKN: 552484) is probably the biggest change in the company’s history. Management is expected to introduce an ad-funded subscription model later this year. At least in parts. To get a discount on the monthly fee, users should be able to use a certain program for little advertising.
This is important as advertising was not a strategic element for a long time. The rebate offer is also received partly positively, but partly with criticism.
Looking at the calendar, we are approaching the end of the year in small steps. Now the first details of this new offer have leaked out. Let’s see if Netflix will soon offer half the price and at the same time half or even double the fun?
Netflix Share: Half Price Fixed!
As reported by the Bloomberg news agency, the first very vague details were published. Netflix’s ad-supported offering is said to be priced at $ 7- $ 9 per month. This can range from 45.2% to 61% of the paid subscription compared to the standard plan which is now $ 15.49. Depending on the management’s decision, there is a lower or higher discount. But about half the price is certain.
The other question remains whether the fun is double or half. In any case, the ad should run for a few minutes per hour, which should adequately compensate for the earning. In principle, this may indicate that the offer is sufficient to attract some interested parties. And even as a second offer at a reasonable price. In any case, an increase seems possible if the price drops.
Nevertheless, the question is not only about whether consumers but also investors have half or twice as much fun. Most importantly, Netflix executives find the sweet spot. It’s a great development story for new, partially ad-financed users. However, this must not lead to the cannibalization of the existing user base by this tariff. The offer may be at least so expensive that this effect is largely avoided. The question then arises whether the price cut is sufficient to bind new members. Difficult, difficult.
Anyway, based on the price, I can see a solid strategy on the part of Netflix executives. We’ll see if it has the desired effect. In any case, growth and new subscribers would be welcome. The offer follows the appropriate trend. Time will tell if it will take up and not cannibalize the existing user base. After all, it shouldn’t take longer to market.
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Vincent owns Netflix stock. Motley Fool owns and recommends Netflix.