Last week, Bloomberg reported that Netflix’s ad-supported tier reached 1 million monthly active users about two months after its launch suggesting that the tier could be gaining momentum after some questions about the product’s viability earlier on. Still, Antenna research shows that Disney+ is outpacing Netflix in terms of sign ups for the services’ respective ad-supported tiers.
I spoke with Matt Spiegel, executive vice president, media & entertainment vertical at TransUnion, to dig a bit deeper on Netflix’s advertising ambitions and the latest developments in the hyper competitive streaming world.
Can you provide some insight about what’s going on with Netflix and the streaming industry in terms of how exactly these platforms are now making choices about cost and content, like Netflix’s recent ad pivot after years of denying it’d ever have ads?
Spiegel: I view what’s happening now as the maturity of the industry that says, “Hey streamers, what you really are is a media company much like many others.” And really, the main difference between what streamers have had versus traditional media companies is that they had direct-to-consumer distribution. That is no longer actually a defining difference. They all now have to make the kind of choices the more traditional media companies have been making for decades. The industry shouldn’t discount the expertise that’s around the tables at Netflix and other streaming media companies.
I think they’re going to figure it out. As you look specifically at Netflix adjusting prices and testing new pricing strategies in different countries and launching the ad-tier model, for me, this looks like what any media company does.
Can you talk more about why these streaming services are experimenting with different release models?
Spiegel: There isn’t one model that works moving forward. It is also important to appreciate how data-driven many streaming organizations are at their core, and how valuable that is to their evolution. Streamers like Netflix are looking at customer data and how consumers are interacting with their product. A key piece for streamers is thinking both about usage frequency and also subscriber longevity. Frequency of use obviously matters a ton. If I only use Netflix once a month, I’m clearly not getting a lot of value out of it, which leads to the chance that I might not be a longtime customer. So, my view is that there is a constant balance that streaming media companies are seeking to find.
I utilize Disney+ almost exclusively when there is new Star Wars content. I’m sure I’m not alone there. So I’m sure Disney+ considers this reality in their approach for how they release episodes of “The Mandalorian.” By spacing out my access over a few months, they are giving me a need to continue my subscription, which might not exist if I could binge the entire season in one night. Price, content library depth, content release schedule and an advertising option are all factors.
What are some challenges Netflix faces as it dives more into the advertising business and plays around with its pricing options?
Spiegel: The challenge for Netflix is most of us who are users of Netflix are still happy enough with it that the need to choose a less expensive ad-supported model feels unnecessary. That suggests that over time, they will raise prices and create more of that choice to find where the curve is. I am very bullish on Netflix’s long-term ability to build an ad business. They’ve hired really smart people running their ad group who know their industry, but I am worried for them about their success in the short-term because I’m not sure they’ll have the audience in the U.S. to pay off the marketer’s expectations. But I do think the ad business was inevitable.
As for the rest of last week’s biggest news…
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Roughly 94% of Disney+ users who were subscribed to its old ad-free tier kept the streaming service despite December’s $3 price hike to $10.99 per month, according to data from Antenna.
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Veteran media executive Dawn Ostroff will join Paramount Global’s board as an independent, nonexecutive director pending a stockholder vote at Paramount’s shareholder May 8 meeting.
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Veteran Marvel Studios executive Victoria Alonso left the studio late last week after 17 years, though the reasons for her departure are unclear, according to multiple sources.
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Netflix will release 40 games this year and has 70 more in development with partners, along with 16 titles that are being created by its in-house game studios.
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After announcing 18,000 layoffs in January, Amazon.com Inc. will lay off an additional 9,000 employees, including workers at its video game streaming platform Twitch, along with cuts in departments such as Amazon Web Services, People, Experience and Technology and advertising, according to a memo from Chief Executive Andy Jassy obtained by Variety.
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FuboTV Inc. announced the rebrand of its sports-focused streaming platform from FuboTV to Fubo via a new ad campaign from actor Ryan Reynolds’ advertising agency and Fubo investor, Maximum Effort, which stars former NBA player Kevin Garnett and includes the tagline, “If Sports Fans Built a Streaming Service.”
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The Writers Guild of America recently proposed that writers can use artificial intelligence tools such as ChatGPT to write scripts as long as it does not impact writers’ credits or residuals.
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“Peaky Blinders” creator Steven Knight will reportedly write Lucasfilm Ltd.’s upcoming untitled “Star Wars” film, set to be helmed by “Ms. Marvel” director Sharmeen Obaid-Chinoy, following the exit of screenwriters Damon Lindelof and Justin Britt-Gibson.
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Apple Inc. plans to spend $1 billion each year to produce films for theatrical release as a way to attract more subscribers to its Apple TV+ streaming service, according to people familiar with the company’s plans.
- The CW laid off 15 employees across the marketing/promotional and finance divisions, including some senior vice presidents, according to sources.
