To counteract the declining subscriber numbers, Netflix launched a low-cost advertising subscription. Now it turns out that the concept apparently didn’t work. After all, demand fell well short of expectations. Now the streaming service apparently has to pay money back to its advertisers.
Netflix advertising subscription has flopped
The idea sounded as simple as it was brilliant. To put a stop to the shrinking subscription numbers, Netflix launched an ad-supported, low-cost subscription in November. After just over a month, it’s clear that the plan didn’t work. After all, far fewer customers opted for the ad-supported subscription than the streaming service had hoped for. The reason for the ad-financed subscription is the miserable quarterly figures that the US company presented for the first quarter of 2022. This is where Netflix entered a downward spiral for the first time. While the service boomed, especially during the Corona crisis, and was able to show millions of new subscribers quarter after quarter, it had to accept a user loss for the first time. Thus, 200,000 users turned their backs on the streaming service.
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Advertising-supported subscription not attractive enough
But why does the advertising subscription flop? The answer seems to be simple. For example, it is probably mainly the price that deters potential users. After all, the advertising subscription is just three euros cheaper than the cheapest Netflix subscription without advertising. Those who opt for the low surcharge not only get ad-free access to the content. On top of that, you have to put up with poorer streaming quality, a limited library, and no download function with the advertising subscription. Employees of the service confirmed to Digiday that the low advertising subscribers should not only reduce the statistics of the streaming service again. On top of that, Netflix seems to be unable to meet its contractual obligations to its advertisers. Viewership numbers are said to be as much as a fifth below the promised amount for some advertisers.
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Advertisers get refund
One could then speak of a maximum flop, if Netflix now also the advertising customers jump off. The streaming service itself is apparently also aware of this. After all, it has decided to pay back its customers. On top of that, Netflix has lowered the costs for those who want to place ads with the service from now on. The timing could hardly be better. After all, the pre-Christmas period is considered the most important time for many companies to place ads. However, Netflix’s price reduction is not really competitive. At $55 for a total of 1,000 impressions, the price did drop by $10. Streaming competitor Disney+ is another $5 cheaper. We are curious to see whether Netflix’s plan will work or whether the advertising subscription will be discontinued sooner or later.
