Netflix is reportedly developing an ad-supported offering
Yahoo Finance anchors discuss reports that Netflix is developing an ad-supported tier in an effort to boost subscribers.
Video Transcript
- Signs of alarm, perhaps, has already been sounded by Netflix, and that's prompted them to take some concrete steps towards an ad-supported offering, this from "The New York Times." The streaming service is reportedly accelerating work on the ad-supported tier which will come at a lower price point to boost subscriber numbers. During Netflix's last quarter, the company reported its first drop in subscribers-- or subscroobers, whatever you want to call them-- in a decade.
An ad-supported tier would mark a complete about face for a company that has been notably resistant to an ad-supported offering compared to its peers, like Hulu and Comcast's Peacock, as well.
- Well, to me, this story raises the question of, for all of these stocks that have been so beaten up-- Peloton, for example, that's down 12 and 1/2% today-- can they do things to right the ship in a slowing economic environment? As I talked about all the way to the top of the show, you have obviously some company-specific stuff going on with many of these, and then you have the broader economic backdrop. And so it's going to be fascinating to see if, let's say-- even if Peloton fixes things-- if the economy goes into recession, will it matter?
- Yeah. I would just hesitate, for those folks out there that think because they're going to launch ads suddenly Netflix is going to see a massive re-acceleration in sales and profits-- that's not how this works. Theoretically, Netflix has to do two things-- continue to cut costs, but also go out there and perhaps get an acquisition into the mix that brings them into a new market. But again, I'm looking through some Yahoo Finance Plus data right now. It is amazing to see Netflix's stock trade about 16 times forward earnings.
That's in line with the company that pays dividends, a real boring company, not a tech company like Netflix, that has traded over 100 times earnings in its past.
- And would that acquisition be in the sports space as well? You think about those licenses and how important that's been to Disney, who we're going to hear from this week too.
- Yeah.
