Netflix hires new head of advertising sales as subscriber prices are expected to rise
Earlier this week, wall street journal Netflix announced that it plans to further increase prices for subscribers once SAG-AFTRA strike negotiations with the Motion Picture and Television Producers Alliance conclude. Negotiations continue. The reported rate hike comes at a time when Netflix’s head of ad sales, Jeremih Gorman, is leaving the company and will be replaced by Amy Reinhardt. Gorman joined Netflix in August 2022 to build the streaming giant’s ad sales division from scratch.
There are reports that Netflix executives are planning to raise subscription fees in several markets around the world, including the United States and Canada. It is unclear how much the price increase will be or when the new rates will begin. Currently, the standard plan (2 streams and no ads) costs $15.49 per month. Premium monthly fee (4 streams and no ads) is $19.99. The ad-supported tier costs $6.99 per month. The ad-free tier was launched late last year. Earlier this year, Netflix eliminated its basic $10-a-month ad-free slot in favor of cheaper ad-supported slots. The last time Netflix raised rates was in January 2022.
The expected price increase comes as rival streaming providers have also announced price hikes. Disney announced in August that price increases for Disney+, Hulu, and ESPN would go into effect next week. In July, Comcast announced its first rate increases for Peacock, which went into effect in August. Earlier this year, Paramount Global announced price increases for Paramount+ due to the addition of Showtime. Warner Bros. Discovery recently announced price increases for Discovery+. Netflix is one of the few prominent streaming services (along with Hulu) that is profitable.
Netflix’s price hikes could also push more subscribers to cheaper ad-supported tiers. A survey released earlier this year by LG Ad Solutions found that consumers are concerned about rising entertainment costs. The findings include:
· 46% of consumers report canceling a streaming service due to financial concerns.
· 94% of consumers are taking steps to keep their streaming costs low by choosing which services they subscribe to (69%).
· 43% of consumers spend less than $50 per month on streaming services.
Tony Marlow, CMO of LG Ad Solutions, said in an email: and innovation in the streaming space. ”
Last November, Netflix launched an ad-supported tier in the US and 11 other global markets. In a surprise announcement this week, the company’s president of global advertising sales, Jeremy Gorman, abruptly resigned 13 months after joining the company. “My passion is scaling businesses from their early stages, and I’ve done it many times before, but none more exciting than Netflix,” Gorman said in a statement. We have built a world-class team and laid the foundation necessary to build a perpetual advertising business,” Gorman said in a statement shared by Netflix. There were also reports that Gorman was at odds with Netflix’s advertising strategy.
Before joining Netflix, Gorman held several high-level management positions in digital media, including chief business officer at Snap and global head of enterprise ad sales at Amazon. Greg Peters, co-CEO of Netflix, said in a statement that in just one year, Gorman “built our advertising business from the ground up” and “attracted world-class brands.” Thank you to the wonderful team.” Reflecting on Gorman’s nearly one-year tenure with the company, Peters said, “She laid the foundation we needed to succeed, including attracting world-class brands to Netflix and our incredible team.” Ta.
Gorman will be replaced by Amy Reinhardt, who previously served as Netflix’s vice president of studio operations. Reinhardt joined Netflix in 2016 as Vice President of Content Acquisition. Previously, he worked at Paramount Pictures as President of Worldwide TV Licensing and Distribution. “I’m excited about this new opportunity and joining a great team at this stage of growth,” Reinhardt said in his statement. Together, we will grow our advertising business and connect great shows and movies with audiences and brands around the world. ” As Mike Shields pointed out in his book, Next to media podcast, “Obviously she’s not an advertising person.”
Peter Naylor, who joined Netflix last year alongside Gorman and is highly regarded as a digital ad sales executive who has contributed to the development of the ad sales division, will continue as vice president of worldwide sales.
Netflix set the CPM at a reported premium rate of $65 upfront for its first ad sale. There has been speculation that Netflix is charging high prices for the services it provides to the advertising community, despite limited commercial inventory and premium content. Negotiations began later than expected due to the slump in the advertising economy. Eventually, a buyer’s market arrived, and Netflix lowered its asking price to match the market.
Additionally, following last May’s writers’ strike, Netflix decided to cancel its long-awaited first upfront event for advertisers at the Paris Theater. While the likes of Disney and NBCU continued with more scaled-down live presentations (with picket lines), Netflix opted to replace its live events with virtual presentations. During the summer advertising age In the US, Netflix estimated that there were only 2 million subscribers to its ad inventory.
In its second-quarter earnings report released in July, Netflix reported a 3% increase in revenue to $8.2 billion, but said advertising was not yet “material.” Netflix said: “We expect revenue growth to accelerate in the second half of 2023 as we begin to take full advantage of paid sharing and continue to see steady growth in ad-supported plans.” Account for at least 10% of total revenue.
Netflix also made several other personnel changes as part of its reorganization. Bryony Gagan, Amy Puckett and Tim Mizrahi, vice presidents of business and legal affairs, and Steven Zager, vice president of corporate affairs and general counsel, are all retiring. Additionally, Eunice Kim has been promoted to Chief Product Officer and Elizabeth Stone has been named Chief Technology Officer.
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