After trying “run ads during TV shows,” Netflix is taking another page out of the traditional media playbook to shore up its revenue..
What happened: Sorry, streaming subscribers: Netflix is determined to push more brands into your living room by expanding its ads business into title sponsorships, which let brands sponsor shows, like Frito-Lay… when it presents an upcoming season of Love is Blind.
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Nespresso and US mobile carrier T-Mobile will also sponsor Netflix’s foray into live sports, a golf tournament between Formula 1 and PGA stars from the documentary series Drive to Survive and Full Swing.
- The company is also rolling out a format called the “binge” ad, which will reward those who watch three episodes in a series in a row with a fourth ad-free episode — after watching a longer ad from a presenting sponsor.
Catch-up: Netflix launched its cheaper, ad-supported subscriptions nearly one year ago to retain increasingly cost-conscious subscribers, as well as diversify its revenue in a looming recession, though growth has reportedly been lagging behind targets.
Why it matters: If Netflix wants to give brands more ways to reach ever-elusive streaming audiences, new types of ads are a bit of no-brainer. But sponsorship also means brands will be on your screen no matter how much you pay for your subscription.
- A more robust suite of options could help the platform get a leadership position in the ad-supported streaming market, which is getting more competitive now that Disney+, Prime Video and Crave have their own similar plans.
Yes, but: Ads are only attractive if there is an audience to see them. In May, Netflix revealed that it had 5 million active users on ad-supported plans — even after growing membership by 70% last quarter, that’s a fraction of the company’s 247 million total subscribers.
Zoom out: Other plans to diversify revenue are based around monetizing Netflix’s most popular IP, whether by selling more merch or opening a brick-and-mortar store featuring ticketed shows and a restaurant. And if that doesn’t work, there’s also getting users to pay up if they want to share passwords.—JK