Netflix’s basic ad-supported plan, which is currently eligible in a dozen countries, has almost five million monthly active users who are on average 34 years old. And more than a quarter of new subscribers in these markets choose this option, with usage and interaction levels similar to those of traditional ad-free schemes, despite a slow start. These data, which are not comparable because a user is not the same as a subscriber, were provided by the company at the annual Upfronts event in which audiovisual content companies show their programming to advertisers so that they can plan around it.
At the same presentation, new sponsorship possibilities were unveiled, linked to the premiere of a series or moments of special predisposition to the consumption of a brand. It was also announced that agencies and advertisers will be able to plan on the Top 10 option, which will guarantee them placement in the 10 most watched titles in the corresponding country. Netflix pledged to media buyers to continue to innovate similar formulas based on the principles of local exposure and latency-free transition between programming and ads, as well as the capping of frequency limits with loads of four to five minutes per hour.
That density was to date the standard across platforms but Warner Bros. Discovery has announced that the plan with commercials for its new Max streaming service, which combines content from HBO Max and Discovery+ and will launch on 23 May, will reduce it from three to four minutes. It remains to be seen how this reduction will affect the platform’s turnover, but for its part Netflix already announced in the presentation of its first quarter results that its ad-supported plan already generates more revenue per user than its standard subscription plan in the US. There, it has already surpassed one million users in two months, according to internal data to which Bloomberg had access.
The growing traction of that plan furthers Netflix’s overall goal to increase the profitability of its users, as does its controversial strategy to get users who have been using third-party accounts to consume content without paying to start generating revenue. Both moves are being complemented on the cost side with the intention of reducing spending by up to 300 million this year, according to sources familiar with the situation recently revealed to The Wall Street Journal.
The platform is working on new sponsorship options to attract advertisers as it prepares further adjustments to reduce operating costs
That figure is very modest compared to the roughly $26 billion in operating costs it recorded last year, but the platform is progressively reducing its spending perimeter against a backdrop of macroeconomic difficulties impacting the streaming business. Part of this strategy is the successive rounds of layoffs it has undertaken in recent times and which are still pending, with up to 300 departures in January alone out of a workforce of some 11,000 people.