Netflix and Disney+ will offer a cheaper subscription with advertising to make up for the loss of their subscribers.
“StrangerThings” Where “Star Wars” with ads, it’s coming soon: with their future, cheaper formulas, Netflix and Disney+ could still strengthen themselves to the detriment, in the first place, of traditional channels.
After having refused for a long time to open its platform to advertisements, Netflix continues to accelerate the schedule for the launch of its formula, now scheduled for November 1, according to several American media, to grill politeness at Disney +, announced for December 8.
“These launches will create the largest premium ad space in over a generation,” advance Dallas Lawrence, of the firm Samba TV. “This is going to be a major moment for advertisers.”
“Not so long ago it was said that subscription would kill advertising”, recalls Kevin Krim, managing director of EDO. “Today, we can clearly see that it was not true.”
The manna is considerable. Ross Benes of Insider Intelligence estimates streaming ad revenue could reach $30 billion within two yearsin the US alone, and probably at least double that globally.
The market has so far been crushed by YouTube which, for the time being, assumes $28.8 billion in revenue in 2021.
Competitors with DNA closer to that of Netflix and Disney, such as Peacock (NBCUniversal), Paramount+, HBO Max or Discovery+, have already launched a version with advertising, but none has the size of the two behemoths: 220 million subscribers for Netflix, 152 million for Disney+.
Some should opt for the offer with advertising, but the platforms also hope to attract newcomers by cutting prices.
According to an internal document quoted by the Wall Street Journal, the giant with the red letters is targeting 40 million users of its formula “low-cost” by the third quarter of 2023.
Threat to the television of yesteryear
“Many people who used to watch classic television and were part of the advertising targets are no longer accessible” to brands because they are no longer viewers of traditional channels, explains Colin Dixon, editor of the site specializing in streaming nScreenMedia.
Streaming “allows advertisers to reach people who have been out of reach for some time, when their attention is most sustained”, he says, because the on-demand subscriber chooses their program and time, unlike old-fashioned television.
This opening should weaken the historical television “who will not have fully deployed a streaming-oriented strategy”, warns Dallas Lawrence, rather small and medium chains, because the four major American stations have all already developed an online presence.
But even the latter, ABC (owned by Disney), CBS, NBC and Fox will suffer, because they were until now the only ones able to offer massive audiences to advertisers. “Once Netflix and Disney open the doors to +Stranger Things+, +Star Wars+ or +Marvel+, it’s going to be a rush,” according to the analyst.
In addition, “the data you collect from streaming advertising is much more substantial and richer than what television gives you of yesteryear”, he points out.
For all non-live content, “Ads go to each viewer individually, allowing for more targeting,” abounds Kevin Krim.
So far virgins of advertising, Disney and Netflix find themselves facing a blank page and can break with traditional formats, play on durations, placement and even involve partners in the creation of new programs.
Unlike traditional channels or other platforms, the two newcomers also provide access to dozens of countries at the same time, an unprecedented configuration.
“If you are a multinational, you can go to a single point of contact and buy advertising space all over the world”, details Colin Dixon. “It’s a pretty powerful offering.”
As to whether Disney and Netflix can take market share beyond their direct competitors, as far as Facebook, Google or Amazon, Ross Benes points out that video on demand has not succeeded so far.
“Digital marketing budgets are growing, enabling both online TV and social media” like YouTube and TikTok from “receive more advertising revenue”.