OTT platforms have gained significant popularity and power in recent years, revolutionising the way we consume media and entertainment. The Broad Audience Reach on these platforms allows content to reach a global audience without traditional broadcast or cable network limitations. Netflix is one of the most well-known and influential OTT platforms. It has played a crucial role in shaping the power of OTT platforms and now it seeks to translate this power into revenue by allowing advertising on its platform.
The Pitch
Recently, Netflix made its very first pitch at the Upfronts to the prospective advertisers to strike a deal with them that will allow it to earn additional revenue.
Upfront is a yearly tradition followed during the peak advertisement season when companies come together for business. This is usually attended by network and media houses and executives of companies who are looking to advertise themselves.
At the Upfront 2023, Netflix for the first time drafted a proposal allowing interested companies to advertise themselves, their products and services on the platform.
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Ad-supported Netflix
In November 2022, Netflix launched its ad-supported services in 12 countries including the US. While the ad-free streaming was approximately $10 a month, the ad-supported services were charged less, at around $7 a month. This would allow the streaming giant to bring in more users to its platform.
However, the ad-supported Netflix is still not introduced to the Indian audience but the company in an interview with Bloomberg hinted towards the same. Since India is a big market for Netflix and the company slashed its prices in 2021 for the Indian audience, the ad-supported Netflix streaming service looks like the next obvious step in this direction.
The Indian statistics
In 2021, Netflix reduced its pricing considerably, to around 60%, of its actual subscription fee to gather more Indians on Netflix. As per the reports provided by Netflix, this cost reduction helped the company increase its engagement rate by 30 percent annually.
The revenue also jumped from 19 percent to 24 percent in 2022, owing its success to the reducing price strategy. Executives at Netflix also calculated that these reductions in prices actually only account to a 5 percent reduction in revenue and do not impact the company severely.
Thereby, there is a high chance that Netflix’s decision to host advertisements on its platform will impact the Indian users and will also offer a further reduced pricing for the Indian market.
The Netflix proposal at Upfront.
Netflix is one of the bigger OTT platforms and has many original successful series and films to its credit. Alongside, it also offers a wide range of entertainment options in different genres, making it a suitable choice for all kinds of audiences.
Bela Bajaria, Netflix’s chief content officer, asserted that “no other entertainment company aspires to create great films and shows across so many genres in so many countries and for such a broad, diverse audience.”
Netflix’s VP of global advertising, Jeremi Gorman, announced that there were now 5 million active members worldwide. Statistically, there are 232.5 million subscribers on Netflix who pay the giant for its services. However, reducing the children profiles and the ad-free subscription users, there are 5 million users to whom the advertisers can show their advertisements.
This will allow companies planning on advertising with Netflix, a huge platform to start with. The company is keen on developing interesting and unique ways to advertise. For starters, Netflix aims at a 30-minute advertisement package spread over a few days, indulging in a plot which will unfold for the person, each time he or she is watching a show.
Netflix’s proposal at the Upfront can be a huge step in the future of OTT platforms, more so because of the cut-throat competition in this field where every company is offering its services at the lowest possible cost. Other organisations including Walt Disney Co, and Comcast were also present to earn their share of dollars through advertising.
