Netflix is one of the few streaming services that’s considered “profitable,” and yet it doesn’t pass on this money to its creatives. According to the company’s Q2 2023 earnings letter (via The Hollywood Reporter), Netflix had a reported revenue of $8.2 billion and net income of $1.5 billion. And yes, you read that number correctly, Netflix made billions of dollars last quarter.
This is due in part to their recent crackdown on password sharing that forces people not in the same household to pay extra per month on their current account or to create a new account entirely in order to access the service. This change contributed to 5.9 million new subscribers according to the earnings report.
Another added source of income for Netflix was the addition of a new, cheaper ad-based tier. However, despite making over a billion dollars last quarter, Netflix has decided to make things worse for their consumers as well by scrapping their lowest paid tier without ads. The “Basic” plan was $9.99 a month, only a few dollars more than their “Standard with Ads” plan, which costs $6.99 per month in the U.S. Now the difference in cost between the cheapest tier without ads and the ad-based tier is $8.50, with the “Standard” plan costing $15.49 a month. Over $15 a month isn’t terrible if you’re able to split the cost among family members and across different households, but now that Netflix has forced so many people to buy their own accounts, this will likely force more people into the ad-based tier.
While on the picket line during the early days of the WGA strike, Shadow and Bone writer Christina Strain talked to the New York Times about Netflix’s shift to ad-based revenue, saying “If they make money doing ads, my guess would be that ads will become a bigger revenue stream for them. And then we’re just working for network television without getting network pay.”
As news of Netflix’s revenue last quarter has spread, other striking writers and actors have taken to Twitter to similarly point out how ad-based revenue gives Netflix the resources of a broadcast or cable network and how they’re being unreasonable for insisting that they don’t have the money to pay their crews fairly.
And they’re right! If ad-based revenue is contributing to billions of dollars of quarterly revenue for Netflix, then why aren’t the writers and actors seeing any of this money? If Netflix is going to force consumers into subscribing to the worst parts of broadcast TV – commercials, only being able to watch things in a certain place, and canceling shows before they get a proper ending – then why can’t they bring back the broadcast compensation and residual system that let writers and actors do their jobs without starving or becoming homeless?
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