It’s been a massive year for Netflix in every way. After the immense success they received with shows like Bridgerton and movies like The Adam Project, all was going Netflix’s way. However, after the reports of their first quarter showing a substantial drop in users. Netflix started to look into different streams of revenue, including commercials.
But what about the existing giants of the advertisement industry, like Google and Facebook? Can Netflix prove to be a worthy rival to them? Let us find out.
Netflix and Google battle for Commercials
Netflix shares fell 35% on Wednesday after the streaming giant reported a 200,000-subscriber loss in the first quarter of the year, indicating slowing growth. The co-CEO Reid Hastings hinted about an ad-supported tier of the service during the company’s most recent earnings conference. But the action might foreshadow Google’s impending rivalry.
According to The Information, at least one Netflix executive was worried that entering the advertising market would “pit the company against Facebook and Google.”
Google is competing for advertising revenue spent on broadcast and cable television by large businesses. In 2020, Google rebranded its premium ad product as YouTube Select, bringing together all of Google’s advertising offerings for significant advertisers.
Netflix, for many years, has proudly boasted a no-add policy. However, according to reports, consumers prefer ad-supported TV over an ad-free subscription by 67%. While viewing television on a streaming service, 57% of customers stated they could handle some advertising.
How can advertisements be beneficial for Netflix?
If Netflix incorporates advertising, it might open up a whole new universe of possibilities for the stalled streaming service. It’s possible that the corporation may start streaming sports. It may also begin to offer linear live TV channels, similar to Peacock, utilizing programming from its extensive archive.
“Facebook and Google in particular should be concerned,” Christine Merrifield-Wehrle, Head of Investment at Crossmedia, told Insider.
However, there is one possibility that may benefit both Google and Netflix: a partnership between the two behemoths. During the earnings call, Hastings also said that instead of building a tech stack, the business will engage other companies to handle the “hard lifting” in terms of advertising technology.
We will have to wait and see what the future holds for the big red streaming machine. But do let us know if ads on Netflix are something that doesn’t bother you.