Well, they did it. Netflix rolled out their ad-supported tier this week. I haven’t had a chance to see for myself how bad it is. All I know is that it’s $7 a month as opposed to Netflix’s top-tier 4K plan which is about $21 a month last time I checked. I know that the whole industry is going to be watching to see how well this all goes over.
Netflix claims that there won’t be more than 5 minutes of ads an hour, which is comparable to Hulu and other ad-supported services and a lot better than the 22 minutes of ads that you’ll see in an hour of broadcast TV. That may be an amount people can live with. We’ll have to see.
The rise and potential fall of Netflix
Like most of you, I first got to know Netflix as a company that sent DVDs through the mail. It was an interesting model, and one that showed how bad the Blockbuster Video experience had gotten. Most folks in cities and suburbs were no more than 5-10 minutes from a Blockbuster Video at that point. Most stores had close to 10,000 cassettes on hand and you could take them home instantly. Yet, more and more of us — myself included — decided that we’d rather wait for a disc to come in the mail than deal with the mess that Blockbuster had become. Netflix was a bona fide hit.
About 10 years ago, Netflix decided to split in two. Streaming which had been free, would now cost money. DVDs would cost about the same. The plan was a flop ad first, so much so that they had to roll it back for a few years. Slowly, insidiously, the DVD business was spun off. It was so quiet that most people didn’t even notice.
About five years ago, I noticed that I was spending less time on Netflix. Yet it was still my most expensive streaming app. I railed about it more than once on this blog. My screams went into the ether, unheard. At least, that is, until this year when a lot of folks realized that Netflix just wasn’t a good value anymore. The company started losing money, fast. Something had to be done.
Rather than lowering prices for everyone, the company decided to ride the advertiser-support bandwagon pioneered by Hulu. They said they’d roll out a new tier priced below practically any other service, with only a small number of ads. And that’s what they did.
Will ads save Netflix?
I’m gonna say, no. Content will save Netflix. The company has plenty of stuff on its app, but most of it isn’t that good. For every Squid Game or The Crown there are about a dozen Sharknadoes. The percentage of bad content is what’s killing them. You can argue that Netflix still has more good content than Apple TV+, but it’s hard to find because there’s just so, so much bad content.
I personally think it’s probably too late for Netflix. I think they’re headed toward obscurity, and that ads won’t save them. If anything, it will reinforce the feeling that Netflix is a lower-end service not worth the money. Premium subcribers won’t pay for it, especially not over $20 a month. Netflix is the only service that still charges more for 4K, which is silly at this point.
I’ll tell ya who’s paying attention…
Disney+ launches its own ad-supported tier next month, for a dollar more than Netflix. Of course, they have a lot of in-house talent who already know how to sell ad space. Let’s not forget that ABC and Hulu are under the very large Disney umbrella. I tend to think Disney+ will be ok with ads. I’ll still keep the ad-free option, but kids aren’t really impatient when it comes to commercials, at least not the way many adults are. The key there is going to be having ads that are safe for kids without being overly targeted to kids.
Two generations ago, parents recoiled at the amount of advertising aimed at children, and how those ads promoted sugary treats and violent toys. A lot of laws were passed to change the way advertising went out to kids. Some of those laws were repealed but the spirit of vigilance remained.
I have a suspicion that Disney+’s ad tier will have a lot of ads for Disney parks, Disney toys, and other Disney related stuff. But if they really want to make money they’ll have to sell ads to someone besides themselves. And they’ll want to be careful with the amount and type of advertising they sell there. But they’re veterans and I’m sure they’ll think about that.
What do you think?
Sure, advertiser-supported streaming is hot. It’s the hottest part of the streaming landscape. But do you really think it will save Netflix? I don’t, but I’d love to hear what you think in the comments below.
