iWorld
Netflix’s US ad tier launch delivers highest sign-up rate since April 2020
Mumbai: OTT platform Netflix recorded its highest daily subscription sign-up rate in the US since the start of the pandemic in April 2020 with the launch of its ad-supported plan on 3 November, according to a new report by Ampere Analysis.
Specifically, the release of the ad tier led to a 58 per cent increase in the streamer’s average daily sign-up volumes from 3rd to 5th November, compared to the three days before the launch.
Since the new plan became available to subscribers, eight per cent of those who signed up for Netflix or switched plans have chosen the ad-tier. Of these, three out of four are new signups, mostly re-subscribers (64 per cent) but also first-time users of the platform (36 per cent).
According to the study, over 75 per cent of new ‘Basic with ads’ subscribers are stacking at least three subscription video on demand (SVoD) services, with Amazon Prime Video, Disney+ and Hulu being the most common other choice.
Tier switching: One in four of the ad tier subscribers are existing Netflix users that have switched tiers. As expected, a large proportion (67 per cent) of these come from the basic tier – the most price-sensitive group of Netflix subscribers. One fifth of switchers (21 per cent) moved from the standard tier, and just 12 per cent come from the premium tier.
Ampere Analysis analyst Mayssa Jamil said, “Netflix’s ‘Basic with Ads’ tier, which is $3/month cheaper than the basic tier, has succeeded at drawing back more price-sensitive Netflix subscribers who had previously churned. In addition to this, with the strengthening of competitor services, the low $6.99 price point makes it more affordable to subscribe to multiple services at once and has therefore also appealed to heavy stackers. Finally, some basic tier users (who are more prone to churning as economic uncertainty and competition increase) have been downgrading to the ad-tier, which will aid customer retention in the long-term.”
iWorld
Snapchat parent Snap cuts 16 per cent of workforce in AI-driven restructuring
The Snapchat parent is axing around 1,000 jobs and closing 300 open roles to save $500m, as artificial intelligence makes smaller teams the new normal
CALIFORNIA: Snap is snapping. The Snapchat parent has confirmed plans to cut around 1,000 employees, roughly 16 per cent of its full-time workforce, as it bets that artificial intelligence can do what headcount once required. Shares jumped more than 10 per cent in premarket trading on the news, a brisk vote of confidence from a market that has watched the stock shed about 31 per cent this year.
The restructuring, which also closes more than 300 open roles, follows pressure from activist investor Irenic Capital Management, which holds an economic interest of about 2.5 per cent in the company and has been loudly pushing Snap to tighten its portfolio and lift performance. The firm got what it asked for, and then some.
Chief executive Evan Spiegel told employees the cuts would reduce annualised expenses by more than $500m by the second half of the year. The company expects to incur charges of between $95m and $130m related to the layoffs, mostly severance, with the bulk landing in the second quarter. Staff in Snap’s North America team were asked to work from home on the day of the announcement.
The financial backdrop is not without bright spots. Snap expects first-quarter revenue to rise around 12 per cent to approximately $1.53 billion, broadly in line with analyst estimates. Adjusted core profit for the January to March quarter is forecast at about $233m, comfortably ahead of Wall Street’s expectation of $186.8m.
The harder question surrounds Specs, Snap’s augmented reality smart glasses subsidiary, which Irenic has urged the company to spin off or shut down entirely. The unit has absorbed more than $3.5 billion in investment and burns through approximately $500m in cash annually. Snap is pressing ahead regardless, with a consumer product expected later this year, even as Meta leads the market in the segment.
Spiegel is betting that leaner teams, smarter machines and a consumer AR play can restore Snap’s credibility with investors who have run out of patience. The redundancy notices have gone out. The harder restructuring, the one that requires a hit product rather than a headcount reduction, is still very much pending.
