Netflix is reportedly slashing the prices it is charging advertisers in the latest sign that its new ad-supported service is falling short of expectations.
The development comes shortly after Netflix reported disappointing quarterly revenue figures that sent shares of the woke streamer tumbling last week. Executives said the ad-supported service has thus far failed to generate “material” financial results for the company.
Netflix is now offering advertisers a range of lower prices, with some recent deals being struck at $39 to $45 per 1,000 viewers, down from $45 to $55, the Wall Street Journal reported. In addition, Netflix has held preliminary talks to sell ads through other parties besides Microsoft, which was the streamer’s exclusive ad-tech partner.
Microsoft had guaranteed Netflix a minimum level of advertising revenue, and is now compelled to pay Netflix the maximum penalty allowed by the contract, the Journal reported.
Netflix debuted the new service — which costs $6.99 a month — in November, hoping the introduction of commercials would juice overall corporate revenue. The streamer even eliminated its cheapest traditional plan, which cost $10 a month, in the apparent hopes of shifting more subscribers to the ad-supported plan.
But the new service has thus far underwhelmed both consumers and Wall Street.
As Breitbart News reported, the streamer recently failed to make viewership targets and as a result, found itself in the embarrassing position of giving money back to advertisers. In some cases, Netflix has only delivered roughly 80 percent of the expected audience.
Netflix is counting on advertising revenue to lift its financial fortunes after a rough 2022 that saw the streamer bleed subscribers for an unprecedented two consecutive quarters.
Executives were hoping a new revenue stream would convince Wall Street to stop paying such close attention to its quarterly subscriber numbers, which took an unprecedented drop during the first and second quarters of last year. Netflix lost well north of one million subscribers.
As a result, the streamer, which still has a production deal with Barack and Michelle Obama, has laid off hundreds of employees worldwide.
As Breitbart News reported, Hollywood is getting clobbered by a weak advertising market as Bidenflation weighs on consumer spending.
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