Why Netflix may need to cut the prices and run some ads? The company said that they are not going to run ads to create more revenue. But with the competition getting more intense. A Wall Street analyst thinks that the company should run some ads.
The shares of Netflix fell more than 2% after Needham analyst Laura Martin downgraded the stock due to their sell rating.
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Martin said that if Netflix will continue to keep its prices which is $9-$16 a month. They might lose 4 million subscribers in the United States next year.
Her solution was to offer an option with $5-$7 a month features and run some advertising about six to eight minutes an hour.
Martin said that those services might help them to fend off some competition from Disney+, Apple+, and CBS All Access. These competitors are already charging much lower prices than the company raging from $5-$7.
Well, most of Netflix’s competitors don’t have those vast libraries the company has. They have some shows of their own.
Netflix was not immediately available when asked about whether they would consider Martin’s idea of creating a cheaper tier with advertisements. But we’ll see if the company has an idea of how they would maintain their stature.