Netflix on Thursday said a subscription option subsidized by ads will debut in November across a dozen countries as the streaming service strives to jumpstart stalled growth.
Netflix reported a loss of 970,000 subscribers in the second quarter along with stagnant profits, and its share price is down 63 percent from this time last year despite rising slightly on the ad-tier news.
The new “Basic with Ads” subscriptions will be priced at $6.99 in the United States — three dollars less than a no-ads basic option, Netflix chief operating officer Greg Peters said in a briefing.
“The timing is great because we really are at this pivotal moment in the entertainment industry and evolution of that industry,” Peters said.
“Now streaming has surpassed both broadcast and cable for total TV time in the United States.”
The ad-discounted tier, a first for Netflix, will roll out in Australia, Brazil, Britain, Canada, France, Germany, Italy, Japan, South Korea, Mexico, Spain and the United States.
Video ads will be from 15 seconds to 30 seconds long.
“We are looking at a very light ad load with no more than four to five minutes of ads per hour, and including some very tight frequency caps so that members don’t see the same ad repeatedly,” Peters said.
After having shunned advertising since it started its streaming service, Netflix acquiesced as competition in the market intensifies and as consumers recoil from soaring inflation.
With the launch of cheaper, ad-supported subscriptions, Netflix and Disney+ are expected to bite into the revenue of traditional television channels.
Netflix rival Disney+ is expected to launch its own ad-subsidized subscription soon.
“These launches are going to create the biggest premium advertising space in more than a generation,” said analytics company Samba TV senior vice president Dallas Lawrence.
“It’s going to be a major moment for advertisers.”
– Avoiding politics –
Netflix has sold nearly all the ad space for the new tier launch, president of worldwide advertising Jeremi Gorman said during the briefing.
Advertisers will be able to target audiences based on factors such as the country they live in as well as show genres or hit shows to be part of “zeitgeist moments” on the platform, executives said.
Netflix will not take political ads, nor will it accept marketing promoting smoking, guns, fireworks “or anything that feels like a get-rich-quick scheme,” Gorman added.
Advertisers will have options to avoid shows with sex, nudity or graphic violence, and Netflix is partnering with Neilson and ad-traffic verification companies to provide data regarding how well messages are reaching audiences, executives said.
“The new Netflix ad-supported tier will help the streamer to staunch the bleeding of its subscriber totals, but it will pull most users from the company’s existing user base instead of expanding the pool of Netflix viewers,” said Insider Intelligence forecasting analyst Peter Newman.
Peters acknowledged the potential for Netflix subscribers to switch to the lower-priced offering, but said the company expects that to be offset by ad revenue plus an overall increase in the number of subscribers.
“We’re not trying to steer people to one plan or the other. We really want to take a pro-consumer approach and let them land on the right plan for them,” Peters said.
“We think that the revenue model will be fine as a result.”
Netflix is continuing to invest in shows it believes will attract, and keep, subscribers.
Peters noted hits such as “Stranger Things” and “Extraordinary Attorney Woo” and pending releases of keenly anticipated films such as “Glass Onion: A Knives Out Mystery.”
US says Amazon running illegal monopoly in online retail
A top US antitrust regulator sued Amazon on Tuesday, accusing the online retail behemoth of running an illegal monopoly by strong-arming sellers and stifling potential rivals.
The highly anticipated lawsuit is another test for the Biden administration as it tries to curb the power of big tech in the face of pushback from US courtrooms.
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said Federal Trade Commission Chair Lina Khan.
The FTC, which was joined by 17 US states in the case, said Amazon broke antitrust laws in two ways, both involving its “marketplace” which links outside sellers to buyers through its platforms.
In the first instance, the case alleges Amazon punishes companies using its platform that sell items elsewhere at lower prices by downranking their products on the site.
It also coerces sellers into signing on to Amazon’s “costly” logistics service in order to be exposed to Prime customers that are the site’s biggest and most catered-to users, the FTC said.
“Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition.
“Seldom in the history of US antitrust law has one case had the potential to do so much good for so many people,” he added.
Amazon said it firmly rejected the premise of the case.
“Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition,” said David Zapolsky, Amazon Senior Vice President of Global Public Policy.
“The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court,” he added.
Small business groups backing the case, hailed the lawsuit.
– ‘Utterly dominated’ –
“Ecommerce should be a dynamic sector with numerous marketplaces vying to attract both sellers and shoppers. Instead, it’s utterly dominated by a single firm,” said Stacy Mitchell, Co-Executive Director of the Institute for Local Self-Reliance.
The FTC has had Amazon in its sights for a few years.
Last June, the FTC filed a complaint against Amazon for “entrapping consumers” with its Prime subscription, which renews automatically and is complicated to cancel.
The FTC has also attacked the group over its respect for data confidentiality, and last May Amazon agreed to pay more than $30 million over allegations of snooping on its security camera Ring.
The case is hugely symbolic for Khan, who made her name in academia for questioning whether antitrust laws were fit for purpose in the digital age in a paper titled “Amazon’s Antitrust Paradox”.
Her celebrated paper was a retort to a seminal work by conservative scholar Robert Bork that said enforcers of fair competition should stand down unless a clear risk of higher prices and a threat to consumers could be proven.
Written in the 1970s, that philosophy guided the government’s attitudes and influenced the judges deciding the biggest cases today.
But US President Joe Biden in 2021 picked Khan to lead the agency in charge of safeguarding the interest of consumers and preserving a level playing field for businesses.
That year Amazon unsuccessfully submitted a complaint to the FTC, asking it to ensure that Khan did not deal with antitrust matters concerning it, criticizing her for a lack of impartiality.
Her track record since taking over the FTC has been checkered after a series of court defeats sowed doubt that she will put an end to decades of Washington’s light-touch approach to antitrust regulation.
In July, Khan was handed her latest loss when a federal court threw out her agency’s objection to Microsoft’s $69 billion buyout of video game giant Activision.
She had suffered an earlier defeat in the same San Francisco courtroom, when a judge said the FTC’s opposition to Facebook-owner Meta buying Within, a VR software company, was out of bounds.
EU tells Apple chief to ‘open up’ to rivals
The EU’s digital chief Thierry Breton told Apple CEO Tim Cook on Tuesday that the iPhone maker must open up its products to competitors as part of Brussels’ tough curbs on tech behemoths.
Earlier this month, the European Union unveiled a list of the digital giants, including Apple, which will face new rules under the Digital Markets Act (DMA) on how they do business.
Other tech firms caught up included Facebook owner Meta and TikTok parent ByteDance.
Apple has previously slammed the DMA, claiming it poses risks to users’ privacy.
Cook was in Brussels to meet with Breton and the acting competition commissioner, Didier Reynders.
“The next job for Apple and other big tech, under the DMA, is to open up its gates to competitors,” Breton said, in a statement.
“Be it the electronic wallet, browsers or app stores, consumers using an Apple iPhone should be able to benefit from competitive services by a range of providers,” he added.
Breton said the two men had a “constructive discussion on Apple’s compliance plan” for the DMA.
Apple would not comment on Cook’s visit.
The EU however won a previous battle with Apple, forcing the company to unveil its new iPhone lineup with a universal charger on September 12.
Brussels’ rules insist all phones and other small devices must be compatible with the USB-C charging cables from the end of next year.
Breton showed Cook his “museum” with several charging cables in a video shared on social media after hailing “cable clutter” as “a thing of the past” in his statement.
The latest battle began when the EU on September 6 named Apple’s operating iOS system, its App Store and its Safari browser as services that must comply with the DMA.
Brussels is also probing whether to include iMessage in that list.
Shortly after the announcement, Apple said it was “very concerned about the privacy and data security risks the DMA poses for our users” and vowed to focus on “how we mitigate these impacts”.
Tech firms roll back misinformation curbs ahead of 2024 polls
As a global election season widely expected to be mired in misinformation and falsehoods fast approaches, the big US-based tech platforms are walking back policies meant to curb them, stoking alarm.
Whether it is YouTube scrapping a key misinformation policy or Facebook altering fact checking controls, the social media giants are demonstrating a certain lassitude with being the sheriffs of the internet Wild West.
The changes have come in a climate of layoffs, cost-cutting measures and pressure from right-wing groups that accuse the likes of Facebook-parent Meta or YouTube owner Google of suppressing free speech.
This has spurred tech companies to loosen content moderation policies, downsize trust and safety teams and, in the case of Elon Musk-owned X (formerly Twitter), restore accounts known for pushing bogus conspiracies.
Those moves, researchers say, have eroded their ability to tackle what is expected to be a deluge of misinformation during more than 50 major elections around the world next year, not only in the United States, but also in India, Africa and the European Union.
“Social media companies aren’t ready for the 2024 election tsunami,” the watchdog Global Coalition for Tech Justice said in a report this month.
“While they continue to count their profits, our democracies are left vulnerable to violent coup attempts, venomous hate speech, and election interference.”
In June, YouTube said it will stop removing content that falsely claims the 2020 US presidential election was plagued by “fraud, errors or glitches,” a move sharply criticized by misinformation researchers.
YouTube justified its action, saying that removing this content could have the “unintended effect of curtailing political speech.”
– ‘Era of Recklessness’ –
Twitter, now known as X, said in November it would no longer enforce its COVID misinformation policy.
Since billionaire Musk’s turbulent acquisition of the platform last year, it has restored thousands of accounts that were once suspended for violations including spreading misinformation and introduced a paid verification system that researchers say has served to boost conspiracy theorists.
Last month, the platform said it would now allow paid political advertising from US candidates, reversing a previous ban and sparking concerns over misinformation and hate speech in next year’s election.
“Musk’s control over Twitter has helped usher in a new era of recklessness by large tech platforms,” Nora Benavidez, from the nonpartisan group Free Press, told AFP.
“We’re observing a significant rollback in concrete measures companies once had in place.”
Platforms are also under pressure from conservative US advocates who accuse them of colluding with the government to censor or suppress right-leaning content under the guise of fact-checking.
“These companies think that if they just keep appeasing Republicans, they’ll just stop causing them problems when all they’re doing is increasing their own vulnerability,” said Berin Szoka, president of TechFreedom, a think tank.
For years, Facebook’s algorithm automatically moved posts lower in the feed if they were flagged by one of the platform’s third-party fact-checking partners, including AFP, reducing the visibility of false or misleading content.
Facebook recently gave US users the controls, allowing them to move this content higher if they want, in a potentially significant move that the platform said will give users more power over its algorithm.
– Hot topic –
The hyperpolarized political climate in the United States has made content moderation on social media platforms a hot-button issue.
Earlier this month, the US Supreme Court temporarily put on hold an order limiting the ability of President Joe Biden’s administration to contact social media companies to remove content it considers to be misinformation.
A lower court of Republican-nominated judges had given that order, ruling that US officials went too far in their efforts to get platforms to censor certain posts.
Misinformation researchers from prominent institutions such as the Stanford Internet Observatory also face a Republican-led congressional inquiry as well as lawsuits from conservative activists who accuse them of promoting censorship — a charge they deny.
Tech sector downsizing that has gutted trust and safety teams and poor access to platform data have further added to their challenges.
“The public urgently needs to know how platforms are being used to manipulate the democratic process,” Ramya Krishnan, from the Knight First Amendment Institute at Columbia University, told AFP.
“Independent research is crucial to exposing these efforts, but platforms continue to get in the way by making it more costly and risky to do this work.”
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