Netflix and other video platforms such as Disney + have come to the conclusion that in order to grow they have to adopt a mixed model between payment without ads (SVOD, Subscription Video On Demand) and viewing with advertising (AVOD, Advertising Video On Demand).
Despite breaking the trend of declining subscribers with 2.4 million more in the third quarter of 2022, Netflix has swerved and has decided to combat – now seriously – shared passwords. At the same time, from November it will offer a cheaper rate with ads.
What will users do?
One of the successes in the expansion of Netflix has been being able to share the password to lower the fee among friends or family. If this is banned now, many users will have to embrace the cheaper rates with advertising if they want to keep the service at a similar cost. The strategy is risky because thousands of subscriptions could be lost while advertising might not make up for that lost revenue. Success would be to sweep the basic rate by attracting new consumers and get new highs in its most expensive rates. Hard.
As predicted by the GECA OTT barometer in Spain, “only” 52.1% of Netflix users will continue with their current plan while 34.3% will try the cheapest option with advertising, 9.2% will give up low and 4.4% will go to another platform. To die of success would be to succeed in the basic rate with advertising and for all its viewers to unsubscribe from the more expensive options. But then Netflix would have become something else.
Netflix looks more and more like traditional television
Little by little, Netflix is renouncing its origins by adopting proposals for audiovisual consumption from traditional television. Let’s look at some examples:
With Netflix Direct, in France, it offers a linear channel with programming in which the viewer no longer has to choose content, as in a traditional television channel.
When you log in and you have to choose a profile, Netflix gives you the option to choose random content with the option “play something”. Do you want to simulate the same traditional television viewing experience when you turn on the screen and settle for what is being broadcast?
And now enter spots 20-second commercials and 5-minute breaks per hour.
It would only lack two audiovisual products to become a typical television channel: offering live news or entertainment content and sporting events. At the moment, Amazon has already broken into Spanish football with the purchase of the rights to the Smartbank League (Second Division) on Prime Video.
Who sets the price for ads
Netflix will sell its advertising in Spain at 35 euros per 1,000 viewers, 17 times more expensive than on general television, according to Inversión Magazine. The key is, according to Netfix, in “the wide options of segmentation by countries and genres, being able to avoid appearing in content incompatible with your brand.”
To accept those rates, traditional TV advertisers need to rely on an industry-recognized auditor to measure the real impact on the population. In this sense, Netflix has announced agreements with DoubleVerify and Integral Ad Science to verify the level of visualization and the validity of the ad traffic. It will do so from the first quarter of 2023.
But it could be insufficient. For this reason, Netflix is signing agreements with long-standing television audience measurement companies such as Nielsen in the United States and with the BARB organization in the United Kingdom. That is, your audience data will no longer be secret in those markets.
In other words, a “new” disruptive audiovisual agent like Netflix seems to go through the traditional measurement hoop to convince advertisers. All for the dough.
Jorge Gallardo-Camacho, Director of the Degree in Audiovisual Communication and New Media, Camilo Jose Cela University
This article was originally published on The Conversation. Read the original.
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