Netflix who has been described by Elon Musk as being infected by a “woke Virus” now want to introduce advertising to their platform as their value tanks by $60 billion.
Overnight Netflix stock fell an additional 14% after falling 16% yesterday.
Netflix Co-Chief Executive Officer Reed Hastings announced plans to look at advertising after Netflix posted a loss of 200,000 customers in the first quarter — the first decline in a decade — and forecast a drop of 2 million this quarter, causing its stock to plunge.
The company will work on creating an ad-supported version of the service over the next year or two.
Elon Musk responded claiming Netflix is shedding subscribers because its programming has been infected by the “woke mind virus” which has made the streaming service “unwatchable.”
Tesla’s billionaire boss was reacting to Netflix’s share price tanking in pre-market trading after it was revealed it had lost 200,000 subscribers between January and March of this year.
The decision to introduce TV commercials was met with a mix of shock, and scepticism by the advertising community that’s been desperate to get access to Netflix global target audience.
Brian Wieser, global president of business intelligence at GroupM, a WPP Plc company told Bloomberg “I thought, there’s no way it’s going to happen,” his whose clients include Ford, Google, and Unilever.
“It’s such a 180 from what they stood for.”
With TV viewership in decline, advertisers are flocking to the growing number of streaming services that include commercials, including Disney + Foxtel, Kayo, Binge, HBO Max, now owned by Warner Bros. Discovery Inc. They’re all catering to consumers who are willing to sit through a few ads in exchange for paying a low monthly subscription fee or nothing at all.
But advertisers’ opportunities remain limited. Streaming services restrict commercials to just a few minutes per hour to avoid upsetting viewers.
Netflix, which announced plans to create a lower-priced version of its service with commercials, would offer brands another opportunity to get in front of the cord-cutters who can no longer be reached on linear TV.
Netflix has allowed marketing before in the form of product placement on shows. But a lower-priced service with commercial breaks would be new.“I think there are still a lot of questions to be answered,” said Michael Law, U.S. chief executive officer of the ad agency Carat, which lists General Motors, Intel, and Procter & Gamble as clients on its website.
Hulu generated $3 billion in ads last year, with about 88% of subscribers choosing an ad-supported plan, notes Michael Morris, an analyst with Guggenheim Partners. He estimates that commercials could contribute $4 billion to profits for Netflix by 2030.
