It is almost certain that Netflix will also introduce advertisements in theNetherlands next year. The new model has already been launched in the UnitedStates, but so far you cannot speak of a resounding success.
This year suddenly came to an end to the explosive growth of Netflix. After adecade of continuous growth, the streaming service suddenly had to disappointits shareholders in April: the number of subscribers had declined for thefirst time in the service’s history.
Netflix steps in
The share price fell, rounds of layoffs followed, and the newspapers were fullof the so-called ‘end of an era’. Still, Netflix quickly had two secretweapons ready. After years of tests and rumors, the company finally madeconcrete what consumers have feared for years: starting next year, Netflixwill tackle password sharing. You can read more about that in this article.
That’s secret weapon number one. The company expects significant growth as aresult of that drastic move. Friends, colleagues and family who share accountswill now suddenly have to take out their own subscription. Cash desk!
Fortunately, that hurts less financially for those individuals than you mightthink. Netflix has one more card to play: a cheaper plan with ads. The companypredicts it can tap into a new segment with a lower price, and initiallyexpected to rake in astronomical revenue from ad deals.
With these new secret codes you can watch all movies and series on Netflix
Subscription with advertisements
Initially yes. The cheaper subscription has already been rolled out in theUnited States, among others. Since the beginning of November they have beenpaying $ 6.99 per month for the brand new option. But yes, then your favoriteshow will be interrupted with commercials. The ad-free plans start at $9.99per month.
Netflix is expected to roll out the cheaper subscription in the Netherlandsearly next year. So the streaming service expects a lot from an ad-filledfuture. After a month and a half, however, that picture of the future looks alot less rosy, if we are to believe research agency Antenna.
Theoptions consumers now have in the United States (Image: Netflix)
Disappointing numbers
The American agency reports that in November only nine percent of all newNetflix subscribers in the United States opted for the new subscription. WhenHBO Max, a major competitor, introduced a new subscription with advertisementin November 2021, fifteen percent of all new subscribers took the bait.
That is not the only sign that the results are disappointing. Digidayjournalists wrote a week ago that Netflix is even transferring money back toadvertisers, because the promised viewing figures were not achieved. Sometimesthe gap is as much as twenty percent. The company gives large advertisersguarantees: for amount X you get Y number of subscribers who see your ads. Butyes, if no one subscribes, then there will not be enough eyeballs to show theads.
Too early?
Anyway, the new business model has only been running for a month. Somethingthat Netflix itself immediately emphasized in a response to The Wall StreetJournal: “It is still very early days for our ad-supported subscription and weare pleased with the launch and commitment as well as the eagerness ofadvertisers to partner with Netflix.”
Netflix also disputes the accuracy of the figures that Antenna shares, whichare also based on third-party data. Not data from the streaming serviceitself. Just as viewing figures in the Netherlands are based on cabinets ownedby a small number of consumers. Not on the actual totals.
Flexible long term
Moreover, the company emphatically focuses on the long term. “What we launchedwas built in the six months after we announced that we were going to do an ad-supported subscription at all,” Jeremi Gorman, advertising boss at Netflix,told Digiday. It’s just a start. He also emphasizes that the current offer is“not representative of our long-term ambitions.”
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The competition scores
So patience is the keyword. Don’t write off the ads on Netflix, is the clearmessage. With this it is also clear that the new subscription is still ontrack is to also come to the Netherlands. The competitors show it can work:The Verge reports that three-quarters of all US Peacock subscribers have optedfor an advertising option. In the case of Hulu, we are talking about 57percent, and Discovery Plus 44 percent. But yes: they have not had therelatively long ad-free history of Netflix.
No, if we really want to judge the success of the new subscription, we have towait at least another year. The strategy clearly goes hand in hand withtackling account sharers, and that puzzle piece is simply not there yet. Onething is already clear: 2023 will be a defining year for the streaming market.