Tue. Jul 23rd, 2024

Netflix’s ad-supported scheme is working as expected. average

By triji May 16, 2024
News

Initial Netflix advertising balance is discreet. In the US and November. Antenna found that the new subscription modality with advertisements wasn’t popular with Netflix subscribers, accounting for only 9% of new subscriptions. Beyond that. Former consumers who switched from more expensive subscriptions make up a large portion of these users.

Data provides a small brushstroke but a modest balance. The advertising plan? NEW Netflix subscription plan. The moniker “basic with ads” reflects its offering: viewing material with adverts for a reasonable 5.49 euros. According to the firm, “Unlike our other plans, ads will be shown before or during most series and movies,” and “normally” four minutes each hour.

It’s not the only oddity of the new plan, lower than the basic (7.99 euros a month), standard (12.99), and premium (17.99). The resolution is 720p, downloads are not included, and the ad-supported level does not allow some movies and series owing to licensing constraints. Since November 10, only Germany, Australia, Brazil, Canada, Korea, USA, France, Italy, Japan, Mexico, the UK, and Spain have the choice.

The data says… The implementation was discreet. In November, Antenna reported US market figures. The ad-supported plan was Netflix’s least popular, according to a recent report. It made up 9% of US November subscribers. Premium left 25%, regular 24%, and basic, the most popular, 41%.

That’s all? No. An interesting interpretation remains from the data. The Wall Street Journal, which reported Antenna’s findings, adds that 57% of advertising plan members in its first month were Netflix newcomers. Data is interesting for what it says and reveals: And the remaining 43%? The New York newspaper reported that these customers switched from more expensive service to the new one with ads.

The percentage may seem big, however when the company’s global subscribers are considered, it blurs: Antenna reports that 0.1% of US Netflix members switched to basic with commercials in November. The option was implemented earlier, on November 3, for $6.99 per month.

Figure interpretation? Netflix is not the only streaming platform to experiment with advertising, allowing us to evaluate its balance with other companies. In June 2021, HBO Max released an advertising-supported version that accounted for 15% of subscriptions, according to Antenna. Again, only US data is available. In its first month, 0.2% of US HBO Max users switched to the plan with commercials, double Netflix’s rate.

Whatever the case, HBO Max proves that situations can alter. Since its launch, HBO Max With Ads has become popular, accounting for approximately one in three registrations. A New York-based analysis business, Antenna, estimates that 21% of HBO Max users are on the ad-supported plan. “Consumers have shown that, with the right price and package, “They will choose for ad-supported video services.”

What does Netflix say? Not to jump to conclusions. “It is still very early for our advertising level and we are satisfied with its launch and participation, as well as with the enthusiasm of advertisers to partner with Netflix,” a Netflix spokesperson told The Wall Street Journal after pointing out Antenna’s inaccurate figures. The data suggests that “the new plan so far is not moving the needle” to improve Netflix’s revenue, but co-founder Jonathan Carson feels that it is too early to move further: ” “Will this boost growth? Too soon?”

The streaming service announced at its first in-person upfront in New York City on Wednesday that its ad tier drives 40% of signups in 12 countries and has 40 million global monthly active users. In recent months, Netflix’s November 2022 ad tier has expanded rapidly. Netflix’s $6.99-per-month plan had over 23 million monthly active customers, according to Amy Reinhard, head of advertising, in January. It had 15 million two months prior. Last year, it had 5 million. Netflix told shareholders in October that its ad tier prompted 30% of signups when accessible. In Q1 2023, Netflix’s ad tier accounted for 18% of gross U.S. customer sign-ups, Antenna reported on May 13.

Analysts expect Netflix to leverage its ad-supported plan to gain more subscribers. Netflix has a 2% turnover rate, compared to the weighted average of 5% for streaming services, according to Antenna. Netflix took time out of its upfront presentation at Pier59 studios, where it’s throwing a two-day experience with rooms themed after famous series, to boast that more than 70% of its ad-supported users watch Netflix for more than 10 hours each month, according to Nielsen. It also claimed that viewers pay more attention three hours into watching than when they start, making them twice as likely to respond to ads as rival streaming services and linear TV. Netflix revealed in its April earnings call that it will stop releasing subscriber counts in Q1 2025, thus this year’s upfront may be the last.

Building pipes Netflix has launched its own adtech platform to give advertisers new buying and measuring options. The internal offering will include measurement relationships with Affinity Solutions, DoubleVerify, EDO Inc, Integral Ad Science, iSpotTV, Kantar, Lucid, NCSolutions, Nielsen, and TVision Netflix named The Trade Desk, Google’s Display & Video 360, Magnite, and Microsoft their key programmatic partners. Nick Seckold, regional vice president for Asia Pacific at Microsoft Advertising, told Campaign that Netflix may soon increase its programmatic capabilities in Asia Pacific.

Australia, Japan, and South Korea are the only Netflix advertising markets. Netflix said Wednesday morning before its presentation that it will telecast the NFL’s two Christmas Day marquee games this year and at least one in the next two years. Celsius energy drinks will sponsor the Jake Paul-Mike Tyson fight streaming on the platform. It launched three sports series with the International Olympic Committee: one on gymnast Simone Biles, one on potential gold medalists ahead of the summer games and qualifying events, and one on the world’s fastest runners. Netflix concluded the upfront dance with Adam Sandler’s Happy Gilmore 2 return and 3 Body Problem’s renewal.

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