PanamaTimes

Saturday, Apr 20, 2024

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

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×