Netflix has been making moves of late. The megastreamer is in talks, competing with a number of other companies, to buy the critic-centered social media platform Letterboxd. With 30 million users, the website could be a unique pivot for whatever company lands the asset. The company has been scrambling since news broke of the poor performance of second seasons on the platform. In addition, Netflix has seen its stock drop eight percent. This week saw mixed reactions to Netflix reporting that profits were up while viewership did not meet growth expectations. This is an increasing trend in a scale-obsessed market. There may be plenty of cash flowing in, but those married to growth metrics will live and die by their subscriber chats and spreadsheets despite the company making a killing. As a result, Netflix will not be releasing regular streaming numbers and will instead opt for yearly reports. The next move, some industry insiders believe, is that Netflix has considered adding a free, ad-supported tier to its platform, potentially including live channels. As The Hollywood Reporter noted, Netflix co-CEO Greg Peters told an earnings call that while “a free offering could make sense in some markets,” the company has no plans to move in that direction. Part of the reason is fear that paying subscribers will just jump into the free tier. “We have to be thoughtful about cannibalization of paid tiers,” said Peters.
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The Netflix co-CEO is in a position of damage control. Solid earnings, according to Wall Street, but growth-obsessed analysts are unimpressed. With knowledge of the plummeting stock, Peters continued,
“We’ve got to ensure that we’ve got the right offering, the right differentiation of that offering. It’s probably also worth noting that having an effective scaled ads business in any candidate country for such an offering is clearly an important enabling factor to make those economics work. So that’s all to say that free is something that we’re going to continue to consider, but we have no near-term plans to launch something.”
The goal, Peters reiterated, remains on accessibility. Despite no plans for a free tier on Netflix, the company continues to expand its reach with an eye towards “optimizing long-term revenue.” Other competitors have had success with free services, such as Tubi and Roku, which have between 2.3 and 3 percent of all television viewing in April. Fox is in talks to make a play for Roku.
We are living in an era of merger mania. The Paramount-Warner Bros. merger is facing all kinds of legal challenges at the moment. Meanwhile, other companies are jockeying for growth by acquiring assets to expand their reach.
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