Netflix unveiled its new, lower-priced plan with commercials just last month and it already is running into trouble, with the left-wing streamer reportedly failing to make viewership targets. As a result, Netflix has found itself in the embarrassing position of giving money back to advertisers.
The development is a potentially serious one for Netflix, which is counting on advertising revenue to lift its financial fortunes after a rough year that saw the streamer bleed subscribers for an unprecedented two consecutive quarters.
Shares of Netflix are down more than 50 percent so far this year.
On Thursday, Digiday reported Netflix is falling short of ad-supported viewership guarantees made to advertisers and is allowing advertisers to take their money back for ads that have yet to run. The specific shortfall amounts vary but in some cases, Netflix has only delivered roughly 80 percent of the expected audience, according to five agency executives who spoke to the outlet.
“They can’t deliver. They don’t have enough inventory to deliver. So they’re literally giving the money back,” said one of the agency executives.
Netflix still has a production deal with Barack and Michelle Obama to produce documentaries as well as scripted content.
The viewership shortfall indicates slower-than-expected consumer adoption of Netflix’s ad-supported plan, which costs $6.99 a month and features commercials. The plan excludes some of Netflix’s most-popular titles, including the latest season of The Crown.
Netflix 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 the year. Netflix lost well north of 1 million subscribers.
As a result, the streamer 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. Media giants including Warner Bros. Discovery, Paramount Global, and AMC Networks have all been hit hard by the fall in ad spending.
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