For years, Netflix refused to include advertising in its business model. But in 2022, when it went through a period of decline, the company finally changed its mind.
Partnering with Microsoft, SVOD has finally launched a new, more affordable offer, but which includes advertisements. Available in France since November 3, this subscription called “Essentiel avec pub” costs 5.99 euros. On this subscription, the user has access to 720p quality in HD. And he has to watch 4-5 minutes of commercials, on average, per hour.
Affordable subscription not taking off yet?
If Netflix finally launched this offer including advertising, it is to boost its growth. Indeed, offering your service at a more reasonable price can encourage more people to take out a subscription instead of using someone else’s account, for example.
Unfortunately, it seems that for the moment, this affordable offer is not really having the expected success. Netflix does not (yet) give the number of users of its new subscription. But a recent article published by our colleagues at Digiday suggests that for the moment the number of users is below what SVOD had hoped for.
The article does not mention numbers. But this one indicates that currently, Netflix would reimburse certain advertisers. Why ? According to Digiday’s sources (from advertising agencies), Netflix would not be able to obtain the audience it had promised to these advertisers. As a result, some advertisers would have been reimbursed for advertisements that were not broadcast (because of this lack of audience).
In some cases, Netflix would only have been able to provide the advertiser with 80% of the audience that was expected. For some advertisers, these are advertisements that must be broadcast during the holiday season, to boost sales during this period. After reimbursement, these advertisers would now look to spend that remaining advertising budget elsewhere.
It’s too early to tell
But others, thinking Netflix’s ad-supported offering will take off later, agreed that ads that couldn’t air this year would be delayed until early 2023. Indeed, Netflix’s Essential ad-supported subscription is still very recent. And it is still difficult to make long-term predictions.
Moreover, as long as the SVOD does not react to this information, caution remains in order. But whatever the case, the publication of the Digiday article has already caused the markets to react. According to Yahoo Finance, following the publication of this article, Netflix stock fell 9% after the close on Thursday.
Otherwise, it should be remembered that Netflix is currently in discussion with Médiamétrie, the measurement institute used by television. In the United States, SVOD is already working with Nielsen.