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· Posted on
September 28, 2022

Netflix is changing its payment terms with comedians cos' cash flow ain't what it used to be

Netflix is starting to make some big changes in its life... and that includes changing how it compensates shows and specials.

What's the key learning?

  • Netflix will 'license' the specials for a period of time and shift the financial burden on artists and producers.
  • This reduces the upfront costs for the Netflix and gives them the flexibility to renew the special if it is performing well over time

👉Background: Netflix had a wild run where it raced to over 220 million subscribers. But by July this year, it had already lost almost 1.2 million subscribers for the year.

👉 What happened: Netflix execs realise that it needs to start making some big changes in its life, like an ad-supported version of the platforms as well as changing how it compensates shows and specials. Think: Hannah Gadsby or Chris Rock features.

👉 What else: Previously, Netflix would buy the specials outright (anywhere from $200,000 to tens of millions of dollars). But now Netflix will ‘license’ the specials for a period of time and shift the financial burden on artists and producers.

What's the key learning?

💡For any company to improve its financial results, it needs to either increase its revenues… or decrease its costs.

💡Increasing revenue at Netflix has been a challenge since its subscriber numbers are declining.

💡So now, Netflix is looking at new ways to reduce its costs. By licensing the content for a set period of time, it reduces the upfront costs for the Netflix and give them the flexibility to renew the special if it is performing well over time.

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