Netflix aims to be better than the linear TV advertising model

Chris Pash
By Chris Pash | 20 July 2022
 
Credit: Erik Mclean via Unsplash

Netflix posted better than expected results for the June quarter as subscriber growth lept slowing.

Total revenue was up 9% to $US7.97 billion. Net paid subscribers fell by almost 1 million from the March quarter to 220.67 million but better than a forecast 2 million drop.

The company expects to add paid net subscribers for the September quarter of 1 million versus 4.4 million in the same three months last year.

The streaming platform also gave details of its plans to offer a cheaper advertising supported subscription tier, confirming that existing plans will remain ad-free.

In a letter to shareholders, Netflix said: “We recently announced Microsoft as our technology and sales partner and we’re targeting to launch this tier around the early part of 2023.

“They are investing heavily to expand their multi-billion advertising business into premium television video, and we are thrilled to be working with such a strong global partner.

“We’re excited by the opportunity given the combination of our very engaged audience and high quality content, which we think will attract premium CPMs from brand advertisers.

“We’ll likely start in a handful of markets where advertising spend is significant.

“Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering.

“So, our advertising business in a few years will likely look quite different than what it looks like on day one.

“Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners.

“While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).”

June quarter 2022 numbers:

netflix june q 2022

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