Netflix surrenders to advertising: will its new rate with ads for less than 8 euros be successful? | Economy

Netflix logo on a mobile screen.
Netflix logo on a mobile screen. Reuters

Netflix surrenders to low cost. your subscribers premium they do not grow at the rate that the series and movie platform needs to achieve its financial objectives. They have even decreased in the last quarter. So you have had no choice but to choose to target a less exclusive audience: they will pay less for the subscription but in exchange for supporting ads. The production company announced last Wednesday an alliance with Microsoft to offer a new subscription service at a lower price than the three that it currently sells on the condition that the contents show advertising. That is to say, that in the most intriguing moments of a series or a movie, a spot, as is already the case with services as popular as YouTube videos or Spotify music, which also have versions premium no ads.

The new rate with ads must be below the basic rate, that is, less than 8 euros, and would be ready throughout 2023, although the company has not set deadlines. New York Times He even talks that it can be brought forward to the end of 2022, if the drop in subscribers continues. Netflix currently markets three rates in Spain: the basic (7.99 euros), the standard (12.99 euros) and the premium (14.99 euros).

The company already announced to its shareholders in April that it was willing to explore the option with ads after the disappointing results of the first quarter of 2022, in which it lost 200,000 subscribers, the first time it had seen a decrease in subscribers since 2011. Figures that have sowed alarm among investors: the firm has lost 70% of its value on the stock market so far this year.

However, he blamed this fall on the “solidarity” of his subscribers who shared the password: of his 221.6 million subscribers, there are 100 million households that use his service and do not pay for it. It was about finding a formula to convert those viewers into new subscribers. To do this, the company implemented two new options on a trial basis in Chile, Costa Rica and Peru for a supplement: add subsidiary accounts for up to two people with whom they do not live and transfer the profile to a new account. But it seems that the pilot experience has not had the desired success. In Spain, the platform has already tried to put a stop to this practice and when it detects that an account is being accessed from outside the home, it can ask the user to enter a verification code to approve the login.

Agreement with Microsoft

Now it embraces the model with advertising, entrusting Microsoft with its management, against the options of Google and NBC, which were given as favorites to partner in this new stage of Netflix. “Microsoft has the proven ability to support all of our advertising needs as we work together to build a new ad-supported offering,” Netflx said in a statement.

The agreement is exclusive, as the firm founded by Bill Gates pointed out: “Sellers who look to Microsoft for their advertising needs will have access to Netflix’s audience and premium connected television inventory.” All ads seen on Netflix “will be available exclusively through the Microsoft platform,” he said in the Redmond computer giant’s statement.

The hybrid model of payment with advertising is not new to series and movie platforms. Hulu and HBO Max already have a mode with ads and Disney + is about to release it. Models vary. Warner Bros Discovery’s HBO Max offers four ads per hour for $9.99, which is $14.99 without ads. Customers of Hulu, in which Disney is the largest shareholder, pay $6.99 and must watch up to 12 ads every hour. The experience premium it goes for $12.99. Disney + has announced that it will limit advertising to four minutes per hour of broadcast, and will free children from it if they enter through their profile.

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