Netflix New Subscription Ad is Launched in Australia, What Is The Real Reason Behind This?

Here you will read details relating to the Netflix new subscription ad launched in Australia. The new Netflix subscription includes adverts and marks the end of the company’s long-standing policy of providing content without commercial breaks.

Adding an extra membership tier may seem like a modest step but it could have consequences for the entire streaming market.

Does that mean there will be commercials for everyone that subscribes?

No. Only customers who subscribe to the subscription with advertisements — which is cheaper than the prior subscriptions — will see them.

In a statement to shareholders last month, the business promised, “Members who do not choose to change will remain on their current plan, without commercials, at the current price.”

Wasn’t Netflix anti-ads?

“Those who have followed Netflix know that I’ve been against the complexity of advertising, and a huge fan of the simplicity of membership,” chief executive Reed Hastings said while unveiling the idea.

“But, as much as I’m a lover of that, I’m a bigger fan of customer choice.”

Why establish a service with ads?

Why establish a service with ads
Why establish a service with ads

Marc C-Scott, a senior lecturer in screen media at Victoria University, said it was a bid to entice users who want to enjoy Netflix content but don’t want to spend as much for it.

It has the potential though to convert on-the-fence customers into paying members.

Comparing it to other digital platforms such as games or applications where you can obtain a free service with commercials or limitations Dr. C-Scott noted that once people learn to like the content they may be more willing to pay to remove the annoyances.

“By no means is it a novel approach,” he remarked.

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Netflix New Subscription Ad: Why now?

Since Netflix originally arrived in Australia, a lot has changed.

“When Netflix first debuted, they were the only game in town,” Dr. C-Scott stated.

The streaming industry has undergone significant changes in recent years.

“As a result, they are reevaluating their brand image and strategies for expanding their consumer base.”

According to data gathered by Deloitte’s Media Consumer Survey, the average number of paid digital subscriptions per Australian home has increased from 2.3 in the previous year to 3.1 in the present.

The survey of more than 2,000 consumers published last month found the typical Gen Z had 4.5 subscriptions, millennials had 4.2 subscriptions and Gen Xers had 2.8 subscriptions.

Put it together with the present cost-of-living problems and you have a real problem. With rising costs, many people are making sacrifices in their spending habits and if they subscribe to many streaming services it may seem reasonable to reduce their usage of some of them.

This can be traced back to the time during the pandemic when people stayed indoors.

Dr. C-Scott observed that “fewer external circumstances affected people’s engagement with their services.” People weren’t going to the movies or eating at restaurants so all those leisurely expenditures were just sitting there.

And there they were, bored at home, looking for anything entertaining to watch. After COVID… People are spending less of their discretionary income on entertainment because they are more active.

For the first time in almost a decade, Netflix saw a decline in membership in the first half of 2022 when it lost 1.2 million users.

To what extent does this matter?

In a letter to shareholders in October, Netflix announced that it had 223 million paying subscriptions throughout the world making it one of the leading competitors in the international streaming industry.

When compared, Disney+’s August subscriber count was 152 million (but if you add in Hulu and ESPN, the Walt Disney Company has 221 million subscriptions all up).

Doctor C-Scott claims Netflix has considerable sway.

“Everyone will sit and watch and see what happens here,” he said.

“But everybody has a different business model and a different customer base.”

He expects that other services will take note of what occurs and evaluate whether or not it is feasible for them.

The findings of the Deloitte survey are parallel. While no single player defines the industry Netflix has been a significant driver of disruption to date, and its swift reactions to saturation are already forcing competitors to respond with even more inventive ideas.

Is this a trend we can expect to see replicated with other services?

Is this a trend we can expect to see replicated with other services
Is this a trend we can expect to see replicated with other services

Disney+, which is set to debut with advertisements in the United States in December has hinted that its reach may be expanded internationally in 2019.

Dr. C-Scott remarked, “It will be interesting to watch what others accomplish.”

The ad-supported business, in various iterations, will be reproduced, but he believes that customers will continue to be willing to pay more for ad-free subscriptions.

He predicted that “additional services will use it; it might be more of those niche services.”

Can we expect a rise in membership as a result?

Yes, according to Dr. C-assessment. Scott’s

“It’s not going to hurt,” he said.

“It’s giving them those consumers that are on the fringe.”

Results from a survey conducted by Deloitte showed that 44% of respondents would be willing to pay $5 monthly in exchange for viewing six minutes of advertisements every hour.

Dr. C-Scott even speculated that sales would be higher in Australia than in the United Kingdom or the United States.

It’s because, unlike the United States, Australia has never had a pay TV system and has instead relied on free-to-air television supported by ads.

What makes this new strategy unique?

What makes this new strategy unique
What makes this new strategy unique

According to Greg Peters, Netflix’s chief operational officer subscribers will see advertising for four to five minutes for every hour of video they consume.

Mr. Peters stated that licensing problems would limit the number of movies and TV episodes available to customers but that the company was “working on” a solution.

With this plan, users can’t save videos to view later, a perk available with higher-priced plans.

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When a subscriber logs in, they will view what kind of advertisements?

Commercials will run for 15-30 seconds, appear both before and during the content and cannot be skipped by viewers (unlike certain YouTube commercials).

Netflix, which is now available in more than 190 countries, plans to offer “personalized” advertising in the future much like it offers customized viewing suggestions.

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