Netflix had originally planned to bring ads to their platform in 2023, but just reported that they will be bringing this forward to 1st November 2022.
The haste from Netflix to introduce a new source of revenue is linked to their loss of over 1 million subscribers in 2022. With the increase in entertainment and streaming services, consumers are spoilt for choice and are exploring their options.
Not to worry, ads will not be integrated into current subscription tiers. A new 'ad tier' subscription will be announced by Netflix, which will likely be cheaper than the lowest subscription tier currently available.
Details of the ad formats (i.e. pre-roll, mid-roll etc.) have yet to be shared, but there are murmurs that advertisers might be looking at a $65 CPM. This is a premium price that top tier publishers charge for high impact executions. That said, I can't think of a more captive audience than a Netflix audience.
Digital advertising has come under scrutiny due to data privacy issues, but somehow the industry continues to thrive. This move by Netflix has raised questions around the sustainability of ad-free subscription models with growing competition in the space and the demand for affordable content services.
Check out this POV on Ads vs Subscription Models in the digital age.
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