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Netflix, hungry for more growth, signals more price hikes

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“pay a little extra” —

Basic ad-free plan being ripped from subscribers in Canada, UK first.

–

Jason Bateman and Laura Linney in Ozark

Enlarge / Jason Bateman and Laura Linney in the Netflix original series Ozark.

Netflix subscribers can expect more price hikes as the company looks to grow revenue in 2024. In its Q4 2023 letter to shareholders, Netflix also revealed plans to eliminate the cheapest ad-free plan available to users.

In the January 23 letter (PDF), Netflix said:

As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.

The statement will be unsavory for frugal streamers who have recently endured price hikes from Netflix and other streaming services. In January 2022, Netflix increased the price of its Basic no-ads tier from $8.99 per month to $9.99/month. In October 2023, that same plan went up to $11.99/month. Meanwhile, Netflix’s Premium ad-free plan increased from $17.99/month to $19.99/month in January 2022 and then to $22.99/month in October.

Netflix has attributed its price hikes to added features, like 4K streaming and gaming. But subscription fees remain the biggest source of revenue for Netflix, giving it obvious reason to leave a door open for even more price hikes in the near future.

Netflix has also used price hikes to encourage users to subscribe to its ad tier, where it has made more average revenue per user. Netflix with ads has cost $6.99/month since launching in November 2022 and has seen feature improvements, like moving from 720p resolution streams to 1080p.

Killing off the cheapest ad-free plan

In another attempt to push subscribers into watching ads on Netflix, the streaming company stopped offering new subscribers the aforementioned $11.99/month, ad-free Basic plan. It included 720p resolution, downloadable content, and support for one device. The change spiked the cheapest price for ad-free Netflix 55.06 percent to $15.49/month.

Netflix customers who were already subscribed to the ad-less Basic plan have been allowed to keep using it. But it seems like that grace period will soon end.

Netflix’s letter reads:

The ads plan now accounts for 40 percent of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from there.

Netflix originally cut the Basic plan in Canada before following suit in the US and UK. Combined with the fact that most of Netflix’s North American users are from the US, it’s expected that Netflix will cut the Basic plan in the US, too.

Netflix’s letter said ad membership grew when it stopped offering the Basic ad-free plan to new subscribers. Ad tier membership grew almost 70 percent quarter over quarter in Q4 2023. The tier has over 23 million subscribers, per Bloomberg.

During an earnings call on Tuesday, Netflix co-CEO Greg Peters noted Netflix’s 2024 priorities as including “pricing optimization” to help improve operating margins and grow revenue and its ad business.

Netflix’s ad business: years of work ahead

Netflix said this week that it has 260.28 million subscribers globally (for comparison, Disney+ has 66.1 million subscribers, Hulu 48.5 million, and Amazon Prime Video is estimated to have about 180.1 million). That’s after adding 13.1 million subscribers in Q4 2023, Netflix’s biggest Q4 yet.

But despite currently besting competitors in subscriber count and cash flow, Netflix faces similar challenges when it comes to wooing advertisers that may be unaccustomed to working with streaming services (which previously had limited advertising opportunities). While Netflix has seen revenue grow from other efforts, like password crackdowns and price hikes, it plans to focus heavily on scaling its ad business over the coming years.

“I’d say we got years of work ahead of us to take the ads business to the point where it’s a material impactor to our general business,” Peters said.

Netflix is already trying to strong-arm customers onto its ad plan. The streaming bundle plan that T-Mobile offers will no longer include ad-free Netflix. Anyone who had ad-less Netflix through a T-Mobile bundle is getting downgraded. Peters said this week that under the previous bundle, “it was hard to make the economics work for everyone.”

Ultimately, the amount of ad dollars up for grabs, including from the declining linear TV networks, is too tasty for streaming services to pass up.

On Tuesday, Netflix announced a $5 billion, 10-year deal to stream World Wrestling Entertainment’s (WWE’s) Raw live on Netflix. The company was able to win a deal out from long-time Raw network USA, which is owned by NBCUniversal. NBCUniversal’s Peacock streaming service also has the rights to some WWE events. But Netflix’s seizure of Raw illustrates its interest in ad dollars from live sports and its pull and budget compared to aging broadcast and cable networks. Looking ahead, we expect to see Netflix consider additional live events that can appeal to advertisers.

Netflix said this week that it’s not anticipating the same amount of subscriber growth that it enjoyed in 2023 in 2024. But it does expect double-digit revenue growth. That newfound money has to come from somewhere. If Netflix can’t pull it all from new subscribers, it will force it out of existing customers through higher prices and ads.

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Wireless TVs use built-in cameras, NFC readers to sell you stuff you see on TV

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webcam protruding out of the Displace TV

Enlarge / A closeup of the webcam on the Displace TV announced in January.

Dislace

It’s no secret that TV makers are seriously invested in pushing ads. Using TVs for advertising goes back to 1941 when the first TV commercial aired. But as we trudge our way through the 21st century, TV vendors are becoming more involved in ensuring that their hardware is used to sell stuff and add to their own recurring revenue.

This has taken various forms, but in some cases, we’re seeing increasingly invasive strategies for turning TVs into a primary place for shopping. The latest approach catching attention comes from the startup Displace. Its upcoming TVs will use integrated webcams and NFC payment readers to make it easy for people to buy stuff they see on TV.

Displace hasn’t officially released a product yet, so skepticism about the TVs it says it will demo at CES 2024 in Las Vegas next month, as spotted by sites like Wifi Hifi, is warranted. (Displace said it would have images of the newly announced TVs to share next year). The startup specializes in wireless TVs with hot-swappable batteries that can vacuum suction-mount to a wall and zip-line slowly off said wall when sensing an unstable connection or low battery. The original “Displace TV” that Displace announced in January is supposed to ship in mid-2024. Displace has been taking preorders for those.

The two new TVs Displace is adding to its 2024 release plans, the Displace Flex and Displace Mini, are all about making watching TV shopping better.

Stop & shop: TV edition

According to Displace’s announcement, the Displace Flex (a 55-inch 4K OLED TV) and Displace Mini (a 27-inch 4K OLED TV) will use proprietary gesture technology and each TV’s integrated 4K camera to tell when a user is raising their hand. It’s unclear how accurate that will be (could the shopping experience accidentally be activated if I raised my hand to tie my hair up, for example?), but at that point, the TV is supposed to pause the content being played. Then, it uses computer vision to “analyze the screen to find products available for sale. Once they see something they want to purchase, viewers drag and drop the product into the global Displace Shopping Cart,” the announcement says.

Displace Shopping will work at any moment the TV is on, and users can buy stuff they see in commercials by using the TVs.

Displace’s December 14 announcement said:

As soon as the viewer is ready to checkout, Displace Payments makes paying as easy as bringing a user’s smartphone or watch near the TV’s built-in NFC payment reader, a fully secure process that requires no credit card info. Viewers can also pay from within the Displace app.

If the TV can’t find a specific product for sale, it will “search for similar items” without user intervention, according to Displace. The TV will show products from any available online retailers, allowing users to select where they want to make their purchase.

Displace hasn’t provided full details about how it will make money off these transactions, but when reached for comment, founder and CEO Balaji Krishnan told Ars Technica that Displace has “different business models, and one of them is to take a transaction fee,” and that Displace will share more details “later.”

Displace also sees people using Displace Payments to pay for telehealth applications and equipped the Flex and Mini with thermal cameras.

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Marketer sparks panic with claims it uses smart devices to eavesdrop on people

ads, Policy, Tech, voice assistant / /
Couple on couch with smart speaker

We’ve all experienced it or heard about it happening: Someone has a conversation about wanting a red jacket, and then suddenly, it seems like they’re seeing ads for red jackets all over the place.

Makers of microphone-equipped electronics sometimes admit to selling voice data to third parties (advertisers). But that’s usually voice data accumulated after a user has prompted their device to start listening to them and after they’ve opted into (preferably not by default) this sort of data collection.

But a marketing company called CMG Local Solutions sparked panic recently by alluding that it has access to people’s private conversations by tapping into data gathered by the microphones on their phones, TVs, and other personal electronics, as first reported by 404 Media on Thursday. The marketing firm had said it uses these personal conversations for ad targeting.

Active Listening

CMG’s Active Listening website starts with a banner promoting an accurate but worrisome statement, “It’s true. Your devices are listening to you.”

A screenshot from CMG's Active Listening website.

Enlarge / A screenshot from CMG’s Active Listening website.

A November 28 blog post described Active Listening technology as using AI to “detect relevant conversations via smartphones, smart TVs, and other devices.” As such, CMG claimed that it knows “when and what to tune into.”

The blog also shamelessly highlighted advertisers’ desire to hear every single whisper made that could help them target campaigns:

This is a world where no pre-purchase murmurs go unanalyzed, and the whispers of consumers become a tool for you to target, retarget, and conquer your local market.

The marketing company didn’t thoroughly detail how it backs its claims. An archived version of the Active Listening site provided a vague breakdown of how Active Listening purportedly works.

The website previously pointed to CMG uploading past client data into its platform to make “buyer personas.” Then, the company would identify relevant keywords for the type of person a CMG customer would want to target. CMG also mentioned placing a tracking pixel on its customers’ sites before entering the Listening Stage, which was only described as: “Active Listening begins and is analyzed via AI to detect pertinent conversations via smartphones, smart TVs, and other devices.”

The archived version of the page discussed an AI-based analysis of the data and generating an “encrypted evergreen audience list” used to re-target ads on various platforms, including streaming TV and audio, display ads, paid social media, YouTube, Google, and Bing Search.

That explanation doesn’t appear to be on the Active Listening page anymore, but CMG still says it can target people who are actively saying things like, “A minivan would be perfect for us” or “This AC is on it’s [sic] last leg!” in conversations.

But are they actively listening?

In a statement emailed to Ars Technica, Cox Media Group said that its advertising tools include “third-party vendor products powered by data sets sourced from users by various social media and other applications then packaged and resold to data servicers.” The statement continues:

Advertising data based on voice and other data is collected by these platforms and devices under the terms and conditions provided by those apps and accepted by their users, and can then be sold to third-party companies and converted into anonymized information for advertisers. This anonymized data then is resold by numerous advertising companies.

The company added that it does not “listen to any conversations or have access to anything beyond a third-party aggregated, anonymized and fully encrypted data set that can be used for ad placement” and “regret[s] any confusion.”

Before Cox Media Group sent its statement, though, CMG’s claims of collecting data on “casual conversations in real-time,” as its blog stated, were questionable. CMG never explained how our devices would somehow be able to garner the computing and networking power necessary to record and send every conversation spoken within the device’s range in “real-time,” unbeknownst to the device’s owner. The firm also never explained how it acquired the type of access that requires law enforcement to obtain a warrant. This is despite CMG’s blog claiming that with Active Listening, advertisers would be able to know “the second someone in your area is concerned about mold in their closet,” for example.

CMG’s November blog post pointed to an unnamed technology partner that can “aggregate and analyze voice data during pre-purchase conversations,” as well as a “growing ability to access microphone data on devices.”

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SHOU ALLOWS YOUR MESSAGE TO BE SEEN KONO AMERICA OFFERS A NEW WAY TO CONNECT WITH CONSUMERS

ads, Highlights, Office Tech, shou, signage, Utility Tech / /

January 14, 2022• by

Representatives from KONO America will attend CES 2022 this January with a spotlight on their SHOU, an innovative system that stands out using movement and light in an innovative and dynamic way.

The SHOU has caught the eye of retailers for its eye-catching display that grabs a

consumer’s attention inside and outside of stores, as well as at trade shows or pop-up

events.

The easy-to-set-up with a customizable message controlled by a phone app. The SHOU

is water-proof and can be installed on a table, wall, window, on furniture or vehicle with its magnetic base, suction cup, or bracket. Any message can be programmed into the system in a variety of colors.

The SHOU’s technology makes it incredibly effective for B2B and B2C needs.

About Kono America: Kono America specializes in the design, development, and

manufacturing of new product concepts utilizing LED technology.

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Last modified: January 12, 2022

About the Author:

Tom is the Editorial Director at TheCESBible.com

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