After the declining subscription numbers at Netflix, the streaming service announced appropriate steps. One option: Netflix with ads.
For the first time since 2011, Netflix had to report a declining number of streaming subscriptions in spring 2022. The service is still the most popular streaming provider worldwide. In the first quarter of this year, however, a decline of a good 200,000 subscribers was recorded. Netflix responded to this by announcing a whole package of measures. Also under discussion was another subscription option for Netflix that includes advertising. There is not only news about this – according to the New York Times, the offer could even be available surprisingly soon.
Netflix announces measures to counteract customer attrition
In order to reduce costs in the future and pick up more subscribers, Netflix wants to select the program more carefully, among other things. 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.
After the streaming service had stuck to its ad-free strategy for years, the loss of customers has now apparently led to a rethink. The slump in the stock market may have played its part. After initially only rumors made the rounds and important Netflix heads expressed their first thoughts, there is now solid news about a Netflix subscription with advertising.
Ad confirmed for Netflix
At this year’s Cannes Lions, a key promotional event, Netflix co-CEO Ted Sarandos confirmed an ad-supported 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 was also very positive, as such a subscription gives consumers significantly more choice and flexibility. It’s also no secret that Netflix, with its more than 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 will probably come in 2022
Now that the “if” has been confirmed, the question of “when” arises. According to a report by the renowned “New York Times”, Netflix is already planning a subscription with advertising very far. The aim is therefore to publish it before the end of this year. A release would be conceivable at the beginning of winter, when the streaming numbers naturally increase because interest is increasing again. Maybe Netflix will also link the start of the subscription with advertising to a big release like “The Witcher” season 3?
In any case, the preparations are already in full swing. As reported by The Wall Street Journal, Netflix is already in talks with several video advertising providers. Google and NBCUniversal, among others, are said to be there. Both companies already have a lot of experience with the relevant technology and are aiming for an exclusive partnership with the streaming giant.
But there are also rumors that Netflix wants to buy the US service Roku in order to benefit from its advertising structure. With this or independently of it, Netflix could find its own solution for the integration of advertising. There is no official statement on the negotiations yet. Sarandos simply said: “We are currently speaking to everyone (…). We want a fairly easy market entry – which in turn we can build on and iterate on. What we do first will not be representative of what the product will ultimately be. I want our product to be better than television.” So maybe Netflix wants to work with advertising partners on a temporary basis and then develop their own solution.
Disney+ is also planning advertising on the streaming platform
Netflix’s main competitor in the streaming market is Disney+. 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.