November, Netflix announced Its long-anticipated ad-supported tier that gives customers in select markets, including the US, the ability to offset the cost of their Netflix subscription by allowing them to interrupt their viewing with ad breaks.so consumer electronics show .
During an interview at Variety’s Entertainment Summit CESexecutives said the company was pleased with the debut selection of advertisers and its diversity.
Commenting on the variety of brands participating, Gorman said: “Consumer goods companies, luxury goods companies, automotive companies…[and] retail. We are looking at a wide range. This is also good for the consumer experience, she noted, as viewers aren’t bored with endless car ads. “There’s a lot of variety in advertising, and I think that’s going to continue,” she predicts Gorman.
The interview also touched on early frustrations and concerns about Netflix’s foray into advertising.
Among them is the major backlash the company has received over high advertising rates, calling for what one industry executive called the “Super Bowl.” CPMsHowever, while Gorman justified the pricing, he admitted that ultimately the market will decide what pricing Netflix can get.
“From a supply and demand perspective, premium CPM reflects two things. One is that we didn’t get as many advertisers. Secondly, I think the premium content environment in which the ads run guarantees high CPMs.”
Of course, whether Netflix constitutes a “premium environment” is up for debate.
“I think we are certainly humble and fully aware that we are the top of the market. I’ll tell you,” says Gorman.
Another concern with Netflix’s ad-supported services is what content can contain ads. Because the streamer wasn’t set up as an ad-supported service to begin with, many of its content deals didn’t include his AVOD rights (video-on-demand ads). This meant that Netflix had limited ad inventory and could not even advertise on some of its own “Netflix Originals” without the proper rights included in the deal.
Gorman also addressed this, saying that Netflix is actively working on the licensing issue.
“As we speak, it’s progressing day by day. We’re renegotiating deals we made a long time ago,” she said, noting that the content people see on a regular basis is a “big deal.” Netflix said about 85% to 95% of its content is available on the ad tier in the meantime, Gorman said.
Second, from a business perspective, offering a lower-cost tier could cannibalize Netflix’s existing subscriptions, as customers drop to cheaper tiers at a faster rate that isn’t offset by growth in the advertising tier. There are real concerns, though Gorman downplayed those concerns by saying that Netflix customers have historically stayed on their current plan.
Unfortunately, executives weren’t able to discuss the adoption of ad-supported products as Netflix is gearing up to announce earnings, but said, “We’re happy with the growth we’re seeing.” I got
Netflix ad tiers are currently available in the US, UK, France, Germany, Spain, Italy, Australia, Japan, South Korea, Brazil, Canada and Mexico. The company has no immediate plans to expand, but in the long term it aims to target a larger advertising market. HD) and is limited to streaming from one device. Also, the content cannot be downloaded to your device for offline viewing.
Moving forward, Netflix plans to do a little more than just the typical ads, such as dynamically inserting ads near relevant moments for marketers, or single-show sponsorships. We also plan to allow marketers to target their ads by age and gender.
