It takes 12 hours and 57 minutes for Netflix customers to watch the new season of the hit series “Stranger Things”. In the future, they will have to plan more time for the streaming evening. Because the service wants to introduce another tariff level: the customer pays less, but has to accept advertising.
For Netflix, the move is an emergency brake. The streaming pioneer has grown for a decade. Now the service has lost customers for the second quarter in a row – this time the company has almost a million fewer customers.
Netflix boss Reed Hastings had previously consistently excluded advertising. In the crisis, the manager makes a U-turn – and follows the example of the competition, which also wants to introduce advertising-based subscriptions. The ad variant is slated to launch in early 2023, initially in “a handful of markets where ad spend is significant,” Netflix said.
At first glance, this seems sensible: Hastings also argues that Netflix can retain customers for whom the standard tariff is too expensive, especially in times of inflation. Especially since Netflix is significantly more expensive than its competitors. For the standard tariff, users in Germany pay almost 13 euros, Disney plus is available for nine euros.
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At second glance, an advertising-financed offer is not without risk for Netflix – especially in Germany: only 36 percent of users who are considering canceling their subscription in this country would keep the service if it became cheaper through advertising. In the Netherlands alone, respondents in an international study by the Simon-Kucher consultancy were even more cautious. Hastings plan is not a sure-fire success.
With advertising, Netflix loses its unique selling proposition
And it makes Netflix seem unbelievable. It was the company from Los Gatos, California, that weaned its viewers from advertising. Many users have fled to Netflix because they didn’t want to be constantly interrupted by advertising. Now threaten twelve minutes of advertising per hour in this country, estimate industry insiders. Netflix is reluctant to provide details on this.
One thing is clear: if Netflix introduces advertising, the service loses its unique selling proposition. He would only be one streaming provider among many – just like every TV station is one among many. Advertising is particularly successful with live content such as sports broadcasts. But Netflix doesn’t offer that.
>>Read here: 970,000 fewer customers: Netflix is losing fewer subscribers than expected, but the competition is growing
In addition, the project is not as trivial as it sounds: Netflix has no experience in this area so far. Competitors like Disney have known about it for years. This is the reason why Netflix recently agreed to cooperate with Microsoft.
The structure of advertising marketing is cost-intensive. Whether that pays off for Netflix is questionable. Perhaps the money would be better invested in the conception of more successful series.
More: Netflix is losing subscribers again, but the competition is growing