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The advertisements on Netflix open a new era this November. The current market leader of streaming platforms is reacting to the drop in subscribers announced a few months ago by opening up to the AVOD market. Many of its competitors already offer this type of service, which poses a major challenge in advertising management and monetization for nonlinear platforms. In this article, we explain what AVOD is, what has led Netflix to this decision, and how to tackle the challenges of advertising in content. 

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The era of advertisements on Netflix

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If this were a comic, we could say that the advertisements on Netflix were the Gallic village that resisted the invader of advertising until a few weeks ago. The difference in this story is that the village has fallen to the push of market results. The drop in subscribers from a few months ago (almost a million) triggered alarms at Netflix. The platform has reacted with several actions, for example, limiting the use of shared accounts. However, it has not opted to release its content weekly like its competitors. Now, advertisements are coming to Netflix. 

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How will advertisements on Netflix be?

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Netflix has decided to enter the AVOD market, but not entirely. Later, we will explain what AVOD is and you will understand the reasons why we say this. The advertisements on Netflix come in the form of basic package. The customer will pay a price of €5.49 per month in this subscription model, where they can enjoy the platform's content with advertising inserts of between 15 and 30 seconds. According to Netflix, the ads will never exceed five minutes per hour. The other ad-free rates remain the same as before. 

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What is AVoD and why isn't Netflix it? 

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AVoD is a nonlinear platform model in which content is served with advertisements, so the company monetizes through this advertising. The advertisements on Netflix do not mean that the channel enters this model. Like the rest of its competitors (Disney, HBO or Prime Video already offer options with ads in some geographies), Netflix has opted for a mixed model. With its new basic package with ads, it aims to attract 500,000 new subscribers in 2022. Fewer than those it lost months ago and a drop in the bucket among the 220 million it currently has.   

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A piece of the advertising pie 

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According to la consulting firm Rethink Research, by 2027 AVoD will represent a global business of 91 billion dollars. Only in 2022 it is expected to end the year accounting for more than 50% of the U.S. market. Obviously, no one wants to miss out on their piece of the pie. Netflix plans to introduce rates with a CPM between $60 and $65. That is, that would be the cost for companies advertising to reach 1,000 people. If we multiply that by the number of subscribers it plans to target, it is clear that it could be a very lucrative business. 

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Content is still king

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However, not all news is good. Some predictions calculate that the king of platforms in 2027 will be Disney +. The only doubt about this, according to Business Wire, lies in India and whether the Walt Disney company will be able to retain the rights to the Indian cricket league to keep the tide of viewers it attracts. That shows us that the content and how we publish it on our platform is what sets the standard, not the advertising. 

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Advertisements on Netflix and nonlinear advertising challenges 

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Netflix and the rest of the platforms that want to switch to the AVoD model must now face the challenge of incorporating advertisements into their nonlinear programming, with everything that entails: automation of these inserts, calculating the advertising rate, etc. All this, combined with the control of the catalog of content that we have to offer our customers. Can you imagine the advantages of being able to combine both things in a single Broadcast Management System?   We cannot imagine, we have the answer in VSNCrea. Thanks to the Commercials module of VSN's BMS, any nonlinear platform can maximize its monetization and advertising, while planning and controlling the publication of all its content. From this module, they can calculate the type of cost of the advertising rate and assign prices per blocks. Thanks to its advanced reports, you will easily control the performance of your content and advertising. All this, while having absolute control over the planning of your publications; you can do it manually, automatically, or through episodic programming depending on the airing rights of your platform. If you want to learn more about VSNCrea, do not hesitate to consult the information on this product or request a demo with our professionals. 

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