Netflix Bans Gambling, Cryptocurrency Ads in New Commercial Plan - Newstbt.com

In an effort to stop its financial draining, Netflix is preparing a new business plan that involves commercials. However, when the streaming platform introduces its ad-supported tier, it is unlikely to include advertisements for gambling, political issues, or cryptocurrencies.

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Reed Hastings, CEO and co-founder of Netflix, is promoting a new ad-supported tier to attract new customers at a lower price point of approximately $7-$9 per month. This new tier will not feature commercials for gambling or cryptocurrency, for reasons of regulatory ambiguity. Initial plans to launch the ad-supported subscription in early 2023 were hastened to compete with Disney+, scheduled for release on Dec. 8. Thus, Netflix will make their new subscription available on Nov. 10.

Netflix will be rolling out a ban on advertisements in various countries around the world, such as Australia, the US, Canada, the UK, Germany, and France. Once boasting of being completely ad-free, the platform will no longer be the same.

Banning Ads

Due to the lack of regulation, other companies have also pulled their advertisements from the political and gaming sectors. Two years ago, Facebook forbade advertising surrounding sports betting and cryptocurrencies, but allowed them in certain zones. In 2019, Alphabet, Google’s parent corporation, reinstated advertising of sports betting in certain places, such as the US. Two years later, Alphabet began allowing advertisement of cryptos, enabling wallet providers and exchanges to promote their services on the search engine. However, last month, Italy imposed a fine of €1.45 million (US$1.47 million) on Google, due to gambling ads being broadcasted on YouTube despite the banning of them. Therefore, Netflix will take the attitude of not meddling in the riskier industries; even on the ad-supported tier, the platform might stay flexible.

According to reports, Subscriptions Down, Revenue Up may not include commercials in its original content or during certain children’s programming.

Subscriptions Down, Revenue Up

Two years ago, Reed Hastings, cofounder, chairman, and CEO of Netflix, bragged about the streaming platform’s commitment to avoiding ads and advertising-supported tiers, claiming it to be “the best capitalism”. This conviction remained strong until January of this year, when Hastings first began to publicly express the opinion that offering an ad-supported tier could give consumers more options. Despite a loss of 200,000 subscribers in the first quarter and 970,000 in the second quarter, these drops have not had a large effect on annual revenue, which for 2019 Macrotrends lists at $20.15 billion, a 27% increase from 2018. Even so, advertising still remains one of the most financially profitable areas, and many platforms have incorporated it into their income streams.

Netflix has seen a steady increase in their revenue over the course of the last year; from a total of $29.69 billion in 2019, their revenue climbed 8.56% to $7.97 billion in Q2 of 2020. Their net income has increased at a much faster rate, with a jump of 54% over 2018 to 2019, and then an explosive 85.58% increase between 2019 and 2020. For Q2 of 2020 their net income was reported to be $1.44 billion, which is a 6.5% increase over the same quarter of 2019. It’s clear that Netflix is heading in the right direction.