Netflix practically killed every part of the traditional television business when it launched its streaming video service 15 years ago. But now, faced with its own existential threat from upstarts closing in on all sides, it’s borrowing from its old rival’s playbook to save itself: advertising.
Starting Tuesday, Netflix is offering a version of its popular streaming service for a deeply discounted price of $5.99 a month. But there’s a catch: Instead of the current subscription plans that allow users to enjoy content endlessly and without interruption to their heart’s content, the new simple version with a smaller content library will show ads before, after and even during them.
It’s a throwback to the commercial breaks that cost traditional television programming.
It may seem strange to see the streaming industry come full circle — from an alternative to cable TV packages that bundle 15 minutes of advertising with every hour of content, to a return to the model it eliminated.
But it’s a sign of how inflation and higher costs have permeated every aspect of the economy.
Sharing passwords money loser
The streaming service also takes steps to crack down on subscribers who share their passwords with friends, family and even co-workers. This is a routine practice, but it is not allowed outside the household. Netflix didn’t seem to care much about sharing passwords, as the company grew so quickly that anyone who got a taste of its content for free would eventually sign up themselves.
But that began to change this year as high inflation prompted consumers to keep a close eye on their spending dollars, and the company posted back-to-back subscriber losses for the first time in its existence.
In addition to raising the prices of its ad-free subscriptions, Netflix will require subscribers to pay an additional fee if they want to share their passwords, starting in early 2023.
“They’re losing a lot of revenue on all the joint accounts,” Vincent Georgie, director of the School of Creative Arts at the University of Windsor in Windsor, Ont., told CBC News in an interview.
“They don’t want to lose people completely, they want to push them towards these cheaper subscriptions.”
Netflix’s ad-supported version costs $5.99 and is only available on one device without high-definition content. That’s different from the ad-free versions, which start at $9.99 a month and go all the way up to $21.99 for subscriptions with all the bells and whistles.
Georgie said the industry is on the brink of major consolidation because “the average consumer is not going to sustainably maintain two, three, four, five or six different streaming subscriptions.”
It’s no coincidence that Netflix is releasing a cheaper, ad-supported version, just as millions of people who used the service without a subscription are being prevented from doing so.
“If they can capture 60 percent of those users, that would be a nice uptick,” Georgie said.
Ads need to be specific, the exec says
While consumers rarely say they enjoy advertising, some in the industry say it doesn’t have to be if it’s done right.
Deacon Webster, chief creative officer at New York-based agency Walrus, said Netflix would have a good chance to differentiate its ad offering by eliminating annoyances like repeating the same ad multiple times and making unique, well-made and expensive ads. tailored to specific performances, such as the Super Bowl.
Unfortunately, Webster said he doesn’t have the impression that Netflix is going to do that.
“They don’t have any special formats, they don’t allow any special sponsorship,” he said in an interview. “They’re bought just like typical advertising is bought online and on cable TV, so… it’s very likely that you’re going to see the same ad over and over again, regardless of what Netflix tells you to the contrary.”
It’s disappointing for advertisers like her, but for consumers like Hayley Markel, no amount of advertising — even good — is attractive.
The Leduc, Alta., resident has been a loyal Netflix subscriber for five years and said he has no interest in saving money if it means getting bombarded by a consumer. “They’re loud, they’re friendly. It’s obnoxious,” he told CBC News in an interview. . “I just can’t stand commercials.
“I’ll still pay my regular price or a slightly increased price to not look at them,” he said.
Streaming companies and advertisers are confident that this is not a common view. In the US, streaming giants such as HBO, NBC-backed Peacock and CBS-owned Paramount Plus have already introduced ad-supported versions, and Disney plans to launch one soon.
In Canada, the new service, called Pluto, will launch in December and will feature more than 100 channels of free-to-air TV shows, movies and sports streaming online on a platform that mimics the channel-browsing experience, complete with commercials.
Around the same time, CBC will introduce a revamped free-to-air news channel available on CBC Gem and several other streaming platforms. The flagship show, hosted by Andrew Chang, is the main draw, with commercials interspersed throughout the day.
While some are skeptical, the University of Windsor’s Georgie said people should underestimate Netflix at their peril because the company has a track record of innovating and getting competitors to follow suit.
“Netflix will survive, I have no doubt about that,” he said, even adding that it’s likely that some who subscribe to the bare-bones ad version may quickly upgrade to more expensive ad-free versions when they see their options. .
If Netflix doesn’t strike the right balance, its attempt to borrow TV’s business model could even lead to another iconic television experience: the bathroom.
“Ten minutes of Netflix commercials, I don’t know I’m sitting there glued to my seat,” he joked. “I’d sit there but watch other screens.”
#ads #Netflix #pay #avoid #CBC #News