November marks the start of a new era: Netflix is adding commercials to its content. The current leader of the streaming market reacts to the loss of subscribers by opening the door to the AVoD market with an advertising subscription option. Many of their competitors already offer this choice, which becomes a challenge regarding content and advertising management. In this article, we explain the meaning of AVoD, what pushed Netflix to the advertising market and the challenges of adding commercials to a non-linear platform.
The Netflix advertising era
If life were a comic book, we would say that Netflix adding commercials is the Gallic villa of Asterix falling to the Roman empire. Netflix resisted the push of the AVoD market until July 2022, when it announced a one million subscribers loss. The platform reacted with several actions, like restrictions on sharing accounts. However, the company didn’t take the path of weekly content publications as their competitors. In addition, it started spreading rumors of its next step: Netflix is adding commercials.
Is Netflix adding commercials to everything?
Netflix has set one foot into the AVoD market, but not both. We’ll explain the meaning of AVoD further and you’ll understand this statement. The policy of Netflix adding commercials turned into a basic subscription only in a few countries for 5,49€ per month. With this option, users will enjoy content with commercials of 15-30 seconds. According to Netflix, the advertising will have a five-minute limit per hour. The other subscription options are still available, but they are more expensive. You’ll have to pay more to be ad-free.
The meaning of AVoD and why Netflix is not that
The meaning of AVoD is Advertising Video on Demand. With this option, the user enjoys the content with commercial insertions that becomes the cornerstone of the platform monetization. Advertising on Netflix won’t become that cornerstone: Netflix expects 500,000 new subscribers of this option by the end of 2022, just a drop in a 220 million subscribers sea and a lower number of users that canceled their account in July. That’s why the company opted for a mixed model. Other competitors (HBO, Disney + or Prime Video already offering advertising subscription options) also took that path before.
The fight for the advertising cake
According to Rethink Research, AVoD will represent a 91$ billion business. Only in 2022, the market expects a 50% growth only in the United States. Obviously, everyone wants to take a piece of cake. Netflix advertising CPM rates are expected to be around 60 and 65 dollars. In other words, that would be the price for a commercial to reach 1,000 people. If we multiply this number by the potential number of subscribers, it becomes clear that Netflix’s income will grow with this decision.
Content is still king
However, not all news is good for Netflix. Some predictions indicate that Disney will become the king of streaming platforms in 2027. According to Business Wire, the key to this overcome is in India. If the Mickey Mouse company retains the rights to the Indian Cricket League, it will also have a wave of users that watch it. This proves that despite the evolutions of the market and formats, the content and how we publish it on our platform still lead the way.
Netflix advertising and the non-linear commercials challenges
Netflix and the rest of the platforms that will take the AVoD path must now face the challenges of adding commercials to their non-linear schedule: the automation of commercials, the CPM rate calculation, etc. All these, combined with the control and content planning they still have to offer to their clients. Imagine that we can face all these challenges using a Broadcast Management System. For us, it’s not a dream; it’s a reality with a name: VSNCrea.
Thanks to its Commercials module, the VSN’s BMS allows any non-linear platform to manage all its monetization and advertising in the same program where it can schedule and plan the release of all its content. From this module, you can select the seconds of the spot for the pricing and the type of Ad Rate cost and assign prices to blocks in the Ad Rates with simple and easy control from a table view. Furthermore, we can control the performance of our content and advertising with the customized advanced analytics reports provided by the system. All these, while we manage our catalog and plan the publication of content in the same system: users can simultaneously schedule the publication of content for non-linear channels, social media and video platforms like YouTube. This publication can be done manually, sequentially, automatically or with a programmatic episode, based on the content’s broadcasting rights. If you want to learn more about VSNCrea, do not hesitate to check the product information or ask for a demo with our professionals.
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