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A recent report claims that Netflix’s new advertising-supported tier is not living up to expectations.
The streaming behemoth has made it possible for advertisers to get their money back for ads that haven’t yet run since Nov. 3, according to a report from Digiday on Thursday.
The article claimed that Netflix allowed the refunds after failing to meet its viewership goals and cited five agency executives in support of its claims. According to reports, the company only met about 80% of the target audience.
Although our ad-supported tier is still in its infancy, a Netflix representative told The Post on Friday, “We’re pleased with the successful launch and the member engagement on the Basic with Ads plan, as well as the eagerness of advertisers to partner at the outset.”
In a fresh note released on Thursday, Macquarie analyst Tim Nollen argued that Netflix’s missed goals are evidence that the product is still in its infancy.
It might take a few years to amass a sizable enough user base to be a significant destination for advertisers, but we believe the service will succeed by luring users from higher ad-free tiers to this lower-price tier rather than adding new subscribers.
Despite being less expensive than Netflix’s most popular $15.49 per month plan without ads, the ad-tier service has some drawbacks, according to critics.
For instance, due to licensing restrictions, the ad-supported service can’t currently offer all Netflix titles, which excludes 5% to 10% of titles, the company said in October statement.
Despite being less expensive than Netflix’s most popular $15.49 per month plan without ads, the ad-tier service has some drawbacks, according to critics.
For instance, due to licensing restrictions, the ad-supported service can’t currently offer all Netflix titles, leaving out between 5% and 10% of titles, the company said in October.
Netflix, known for popular shows like “Stranger Things,” “Emily in Paris,” and “Squid Games,” claimed to have “hundreds” of advertisers and to be almost sold out at the time.
In order to boost subscriber growth—which had fallen by nearly 1 million earlier this year—Netflix launched the ad-supported service. Thanks to new shows that viewers will want to binge watch, like the serial killer series “Dahmer – Monster: The Jeffrey Dahmer Story,” the streaming service, which has over 223 million paying subscribers, was able to turn around losses and resume growth in the third quarter.
The Los Gatos, California-based company stated that it anticipates the ad tier to boost demand over time, but some feared that Netflix would lose market share to competitors who offer streaming bundles with a wider variety of content.
Disney’s bundle, which includes Disney+, Hulu, and ESPN+, along with Amazon’s bundle with Prime shipping and Prime Video, and YouTube TV’s bundle were cited by Needham analyst Laura Martin as the genuine winners that “can not be displaced.”
Martin predicted that “70 to 80% of the total economics [in streaming] will end up in those three companies, which is what we’ve seen in digital markets” in an interview with Yahoo Finance Live on Wednesday.
What do you think of that Netflix advertising tier? Please let us know in the comments.
