But Wednesday’s move to significantly bump prices, marked an acknowledgment by Iger of the media giant’s intent to squeeze more revenue out of streaming by pushing consumers to the advertising-supported plans, which have proven to be more profitable.
“The advertising marketplace for streaming is picking up,” Iger told investors on the quarterly earnings call. “It’s more healthy than the advertising marketplace for linear television. We believe in the future of advertising on our streaming platforms, both Disney+ and Hulu.”
This is extremely important for them. Netflix’s excellent deal for most of its streaming existence was obviously a thorn in the side of many other businesses. Even if streaming services can get you to pay an exorbitant amount of money on an ad-free tier, advertisers are frothing for the chance to advertise to you regardless. They want you to see their ads so badly. And let’s not forget all the big tech companies, Netflix included, were riding high during the free money days of 0% interest loans. Those days are over, and the bill is due. Wall Street wants its money. And we are all the ones who have to pay up. Cheap streaming is officially over.
This is why these companies, including Netflix, have all introduced ad tiers. Not only is it a great way for them to juice their revenue streams, but also every other company wants a permanent residence in your brain, and then some. Given the way things have been going since duo-eras of the COVID pandemic and corporate profit-based inflation, they don’t even need to collude on prices. All the execs need to do is look at the business press and say, “Hey, they’re getting away with increased prices and password sharing crackdowns. We can do the same thing. The pay pigs keep paying!”
As far as I know internet advertising is an economy destroying sunk cost fallacy. No one makes money off of it, but if they stop basically everything collapses catastrophically, so they just keep pouring more money in to it in hopes that someone will find a way to make it profitable before the bill comes due.
Ehhh, not really. If showing 10,000 people an ad costs you $10 and even one person made a purchase off that, you’ve paid for the ad buy. Internet ad conversions are considered unbelievably excellent if 1% of viewers click on the ad and 1% of those people make a purchase.
Also, if you don’t advertise, then your competition that do advertise are going to eat your lunch.
Big advertising budgets that are funded from the value alienated from exploited workers and consumers. Information asymmetry in the marketplace means that even if you make a superior product at a lower price, you could still be outcompeted by an expensive inferior product if more people know about that worse product and don’t know about your product.
That’s for most basic products anyway. Luxury products like bags and clothes are almost all marketing since the cost to create them is so low compared to their sales price. People buy them because of perceptions created by marketing and not any inherent value in the product itself.
This is extremely important for them. Netflix’s excellent deal for most of its streaming existence was obviously a thorn in the side of many other businesses. Even if streaming services can get you to pay an exorbitant amount of money on an ad-free tier, advertisers are frothing for the chance to advertise to you regardless. They want you to see their ads so badly. And let’s not forget all the big tech companies, Netflix included, were riding high during the free money days of 0% interest loans. Those days are over, and the bill is due. Wall Street wants its money. And we are all the ones who have to pay up. Cheap streaming is officially over.
This is why these companies, including Netflix, have all introduced ad tiers. Not only is it a great way for them to juice their revenue streams, but also every other company wants a permanent residence in your brain, and then some. Given the way things have been going since duo-eras of the COVID pandemic and corporate profit-based inflation, they don’t even need to collude on prices. All the execs need to do is look at the business press and say, “Hey, they’re getting away with increased prices and password sharing crackdowns. We can do the same thing. The pay pigs keep paying!”
I really cannot understand why advertising is such a huge business. Where does all the money spent on advertising really come from?
As far as I know internet advertising is an economy destroying sunk cost fallacy. No one makes money off of it, but if they stop basically everything collapses catastrophically, so they just keep pouring more money in to it in hopes that someone will find a way to make it profitable before the bill comes due.
Ehhh, not really. If showing 10,000 people an ad costs you $10 and even one person made a purchase off that, you’ve paid for the ad buy. Internet ad conversions are considered unbelievably excellent if 1% of viewers click on the ad and 1% of those people make a purchase.
Also, if you don’t advertise, then your competition that do advertise are going to eat your lunch.
Big advertising budgets that are funded from the value alienated from exploited workers and consumers. Information asymmetry in the marketplace means that even if you make a superior product at a lower price, you could still be outcompeted by an expensive inferior product if more people know about that worse product and don’t know about your product.
That’s for most basic products anyway. Luxury products like bags and clothes are almost all marketing since the cost to create them is so low compared to their sales price. People buy them because of perceptions created by marketing and not any inherent value in the product itself.