The streaming market is changing, competition among providers is constantly growing. Netflix notices that too. After the recent decline in subscription numbers, the streaming service announced appropriate steps. One option: Netflix with ads.
So far, 2022 isn’t looking particularly rosy for Netflix. After streaming subscriptions fell by 200,000 in spring 2022, the provider also had to accept falling numbers in the second quarter. Netflix lost a whopping 970,000 subscribers in Q2. Nevertheless, Netflix is still one of the most popular streaming providers worldwide. The provider is hoping for a boost in this situation with a new package of measures. Also included is a cheaper Netflix subscription, but it includes advertising. The company revealed when it should come when it announced its current figures.
Ad confirmed for Netflix
Already at this year’s Cannes Lions, an important advertising event, Netflix’s co-CEO, Ted Sarandos, confirmed the advertising-financed subscription.
We left a large segment of customers at the table, namely the people who say, “Netflix is too expensive for me and I don’t mind advertising.”
Ted Sarandos
His CEO colleague Hastings also commented positively, since such a subscription gives consumers significantly more choice and flexibility. It’s also no secret that Netflix, with around 220 million accounts, is extremely attractive as an advertising platform. Even if only a fraction were to switch to a Netflix subscription with ads, the effect would be huge. In addition, one could win back customers who have migrated to the competition because of the price increase.
Also interesting: Experts have been expecting advertising on Netflix since 2019
Netflix with advertising planned for early 2023
According to a report by the renowned “New York Times”, Netflix is already planning a subscription with advertising very far. For a while it even looked like Netflix could start the new offer this year. But now it is clear: Netflix with advertising will not come until the beginning of 2023 at the earliest. The streaming provider officially announced this in a letter to its shareholders. With the start of the new year, the offer should initially be rolled out “in a handful of markets” so that Netflix can make its first experiences with the advertising-financed subscription.
In the meantime, it is also clear who will help Netflix to set up the model with advertising. In the future, the streaming provider will work with Microsoft. The company should therefore not only look after the technology, but also the sale of advertisements on Netflix. According to The Wall Street Journal, the company had also previously held talks with Google and NBCUniversal. Both companies already have a lot of experience with the relevant technology and are aiming for an exclusive partnership with the streaming giant. But in the end, the choice fell on Microsoft.
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Netflix announces further measures
Netflix sees another measure to reduce costs in the future and to pick up more subscribers in the adjustment of the program. According to Netflix CEO Reed Hastings, this means fewer and more high-quality productions, shorter series and shorter episodes. However, it is not yet known exactly what the program design should look like. In any case, the list of new products currently reads just as extensively as usual. In addition, Netflix wants to crack down on illegal account sharing, as TECHBOOK also reported.
Disney+ is also planning advertising on the streaming platform
Disney+ is Netflix’s main competitor in the streaming market. Although the provider is still a few million subscriptions behind Netflix, there are now almost 140 million subscribers. With the plan to introduce a subscription with advertising, Netflix is actually primarily following Disney+. The provider announced appropriate steps back in March.
The competition between the two providers could now also explain the rush shown by Netflix. It has long been confirmed that Disney + will come with advertising in 2022. Disney+ is talking about an average of four minutes of advertising per hour. In Germany, RTL+ and Joyn also offer a comparable model.