Netflix Inc. (NASDAQ:NFLX) dropped over 1.06% in pre trading session on Monday as it is attempting to decrease expenditures in the humor area. The streaming service has begun to change its pricing model for specials, currently licensing some for two years for $200,000 per year, as per reported by WSJ.
This is part of Netflix’s bigger strategy of cutting expenses in order to increase profitability. According to the Wall Street Journal, the new licensing scheme will move part of the financial load onto the comic. As a result, companies will be responsible for their own production costs, which Netflix previously funded. In exchange, the comics will have greater control over their work.
So, once the two-year license period expires, they will reclaim full control of the content and will be able to sell it to other venues and platforms. We all know how important humor has been for Netflix. They’ve made significant investments in this sector, featuring specials from Dave Chappelle, Bill Burr, and Pete Davidson, to name a few. The Journal named Whitney Cummings as one of the comedians who will benefit from this two-year license agreement.
To put this in context, the streamer previously purchased these comedy specials entirely. As a result, they would pay performers in one big payment. Depending on the comic, the lump sum may be as high as $1 million to help with part of the production costs. So this is only another possibility. Certainly less expensive for Netflix. There are certain advantages and disadvantages for performance. So we’ll see what happens.
Netflix likely seek to purchase certain contracts entirely, particularly for some of the more successful standup comedians. However, as Netflix becomes more aggressive in decreasing costs, choosing becomes increasingly crucial. It’s also worth noting that some of the other streaming services you’re seeing on your screen, such as Amazon and Apple TV+, will now have better access to some of this talent. So it may shake up the landscape there as well.
