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the year everything changed on netflix

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10 years ago now, Netflix debuted its first major international success in its own production. On February 1, 2013, the first season of House of cards. A year ago he started his adventure in his own production with Norwegian lilyhammerBut it was the political drama with Kevin Spacey and Robin Wright that gave the starting signal to the ambitious project with which the stage of Los Gatos (California) managed to lead a revolution in a few years. streaming Born in 1997 as a snail mail DVD rental company, the company made an early jump to digital and raced to lead digital television with global ambitions. It built its model on the image of a friendly and open company, which also welcomed and revived titles abandoned by other chains. It also boasted state-of-the-art technology and an algorithm that recommended series based on each one’s tastes that helped find the next great world hit. In the ever-changing world of the audiovisual industry, the past year has redefined the company’s path. This is the story of the year that changed everything on Netflix.

In the presentation of results for the first quarter of 2022, the company announced that for the first time in its history, it had lost customers. the pandemic hastened the explosion streaming, and the platform discovered in 2022 that, possibly, the limits of growth were closer than they imagined. The company’s shares fell on the prospect of a new and sharp loss of customers for the next quarter. Shortly after, the platform announced the layoff of 150 employees. In July it was revealed that a million more had fallen between April and June 2022, well below the estimated two million. These declines served as a turning point: the platform wars were entering a new phase where unstoppable growth was no longer necessary to make a business profitable and financially sustainable.

To do this, Netflix focused on three main areas affecting advertising, shared accounts and content. In March last year, the company’s finance director surprised us by not ruling out the introduction of advertisements on its platform, which until then showed a complete rejection of funding through advertising. “never say Never”. That slight hint raised the rabbit. Shortly thereafter it was confirmed that they were working on a version with advertising. And in November, exactly six months later, Netflix launched its Basic plan with ads. As such, it was ahead of Disney+, whose ad-supported version arrived in the United States in December (it’s expected to be expanded to other countries this year). According to data provided by the company in its last presentation to investors, it added 7.7 million customers in the final quarter of 2022, well above the forecast of 4.5 million. The company did not elaborate on how many of them took advantage of the cheaper option with ads, but a report by specialized communications consultant Ampere Analytics estimated that 10% of the company’s new customers subscribe to the version with ads. Are. ,

Jenna Ortega in
Jenna Ortega in “Wednesday,” one of Netflix’s last big hits.

One of the other fronts Netflix has been working on over the years was shared accounts, in order to achieve this greater profitability for the company. The company estimates that about 100 million people use its platform without creating their own account, that is, they share the account of others. This is a practice that the company itself encouraged with messages on social networks and advertising campaigns in the phase in which it aimed to gain market share. Now things have changed and they are ready to accept the initial response if it means profit in the medium or long term. For months, in Chile, Costa Rica and Peru, it had already been testing a system that limited access to a single account to a customer’s home (i.e., following what was stated in their usage policies from the start). And requested additional payment for it. Each user has moved to a similar system in four other countries to join this February: Canada, New Zealand, Portugal and Spain. “This will not be a universally popular movement,” acknowledged Greg Peters, the platform’s new CEO, along with Ted Sarandos, who also announced that they expect a backlash in the form of short-term cancellations similar to price hikes. it occurs. ,

image crisis

Added to this backlash is the intangible blow to a company that has made its image its strength. If HBO is obsessed with the prestige and quality of the offering and Disney sticks to family content and its big brands, Netflix has opted for a modern and intimate image, a brand Cold That some users have been harmed by these latest changes.

Content is the other, essential flank on which Netflix works to achieve its objective of profitability. So far, the company has followed a production model that tries to flood the market with frequent releases. In a letter to shareholders in January this year, the company assured that it has already passed the “most intensive phase” in the creation of its original programming. Now, the idea is to prioritize quality over quantity, although they must maintain production levels to satisfy a market that constantly demands new blood. And they also put a lot of thought into which productions they renew, taking into account how many users viewed them in their first 28 days on the platform and how many of those users finished the season. Also their cost of production and other factors.

With these fronts open, Netflix is ​​in for a year full of changes, including the departure of company co-founder Reed Hastings as CEO. A new Netflix to compete in a market full of competition, it seems to be at the peak of a continuous increase in television production and which, unlike other companies (Disney, Amazon, Apple …) has only one salvation: its platform.

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