Thursday, May 19, 2022
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The ad could be coming to Netflix in the coming months

A subscription with advertising? Reed Hastings, the co-chief executive of Netflix, had mentioned last April, during the publication of the results for the first quarter of 2022, only an almost remote possibility. “We will try to find a solution over the next year or two,” he said very vaguely, about a subscription offer with advertising that would be offered to garner new subscribers, and increase the company’s revenues have slowed for several months. This was a historic reversal for those who had always opposed introducing advertising before, during or after the broadcast of series, films or documentaries offered on the platform. But some felt that this was only a facade reversal, a speech made to reassure investors, after the announcement of the loss of 200,000 subscribers which had plunged Netflix shares by 35%.

But it seems that this offer with advertising is indeed taking shape… and much sooner than expected. According to a note sent in May to the employees of the company, that the New York Times has been able to consult, the subscription formula with advertising, which will cost less than the subscription without advertising, will be offered from the end of the year, during the last three months of 2022. It must be said that this type of subscription is particularly popular with Netflix’s competitors, especially in this period of high inflation. “People want cheaper options”, could we read in this note commented by the American daily. Netflix also reportedly said that “every major streaming company except Apple already has or has announced an ad-supported service.”

Offers with advertising would generate more revenue than offers without advertising

In recent months, it is true that other streaming platforms have launched offers with advertising, such as Peacock, HBO Max and Paramount+. Disney+ will do so soon. And the formula would be more profitable than the one without advertising, which is more expensive. According to executives at streaming services Hulu and HBO Max, ad-supported subscription plans generate more revenue per user than ad-free options, reports Fortune April 19.

Finally, the note addressed to Netflix employees specified that the subscription with advertising will be accompanied by “wider projects to charge for sharing”, evoking the other lever of action that Netflix wanted to activate to garner new subscribers. In mid-April, the world leader in streaming explained that it wanted to put an end to this practice of sharing passwords, which would represent 100 million people. The note does not specify how the company intends to go about it.

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