San Francisco (AFP) – After grabbing millions of viewers from TV channels, Netflix intends to please their precious advertisers: the streaming giant will launch its new subscription with commercials in November in twelve countries in the hope of reviving its lackluster growth.
“We are confident that a lower consumer price, together with strong ad monetization, will allow us to grow our subscriber base and over time generate significant incremental revenue,” said Greg Peters, CEO of the California-based group, during a press conference Thursday.
The cheapest subscription will cost $6.99 a month in the US (€5.99 in France for the “Essentiel” price with ads) and will include 15- to 30-second ads aired at the beginning and middle of programs.
The basic ad-free offerings remain at their current price ($9.99 in the US and €8.99 in France).
The pioneer of the sector thus cuts the grass under the feet of the competitor Disney+, which will launch its own offer with advertising in December at $7.99 per month, while its basic subscription drops to $10.99. .
Audiences’ transition from live TV to on-demand programming via the Internet “has accelerated to the point where streaming has overtaken traditional channels and cable in time spent watching TV in the United States,” Greg Peters said.
“Netflix’s share of this TV time in the US is still only 8%, but it’s more than any other channel, which I think is important for advertisers,” he said. – he adds.
Out of stock
In the first quarter of 2022, Netflix had lost 200,000 subscribers worldwide compared to the end of 2021. The news had crashed the share price by 25%. Then, from March to June, 970,000 subscribers left the platform.
The pioneer in the sector, which has more than 220 million subscribers in total, took two major decisions to turn the tide. It will tighten the screw on the side of sharing identifiers and passwords, which allows many people to access the platform without paying.
And he decided to offer a subscription formula with advertising, and even to accelerate its emergence, after years of rejecting this less prestigious solution.
Specifically, the users in question will see an average of 4 to 5 minutes of advertising per hour. Their catalog will be limited by about 15% because Netflix cannot advertise certain licensed movies and series.
Children’s programs will initially not be affected by ads, and for some newer movies, ads will be longer but only run at the very beginning.
The reduced price will “attract consumers”, says Ross Benes of Insider Intelligence, “but since none of the Netflix users currently watch ads, it will take some time before a large part of the current viewers does not adopt this formula “.
Advertisers, from car and luxury brands to tour operators, have responded in droves, according to Jeremi Gorman, Netflix’s director of advertising. “We pretty much sold out of our inventory for the launch,” she said.
In terms of targeting, they will be able to choose the countries and the genre (comedy, action, documentary, etc.) and exclude certain characteristics (violence, nudity, etc.), following the prevailing model of traditional television.
Netflix, with the help of its partner Microsoft, will collect information such as the gender and age of its users and plans to do so-called behavioral advertising targeting, i.e. personalized according to people’s preferences. , as on the Internet.
“It’s a win-win for advertisers and for our subscribers,” assured Jeremi Gorman. “For people who choose the ad formula, it’s important to show them ads that are relevant to them and speak to them”.
Personalization also drives up prices for brands, as finely targeted ads at scale provide better ROI.
The company has not provided its pricing, but according to Wall Street Journal sources in a late August article, advertisers will initially have to pay about $65 to target 1,000 viewers, and possibly $80 after that, a price considered too higher than other streaming platforms.
According to Insider Intelligence, ad revenue from streaming could reach $30 billion within two years in the US alone, and likely at least double that worldwide. The market is currently crushed by YouTube.
© 2022 AFP