On Tuesday, Netflix executives Greg Peters (COO and Chief Product Officer) and Spencer Neumann (CFO) shared some more color on ambitions for the streaming giant’s first foray into the advertising space. The new lower-cost plan with ads is set to launch in the U.S. and 11 other countries this November, priced at $6.99 per month. Here are some highlights from Peters’ comments on the earnings call about this new development.
Peters said that when it comes to confidence in the advertising side of the business, “the initial demand that we’re seeing is very strong.” He added that there’s a lot of interest from advertisers in working with Netflix given the captive audience and viewing environment. As such, he believes that “over time, [the ads] will become a more meaningful part of our P&L.”
In terms of how many ads users can expect to see, Peters said that they’ve designed the experience “so you don’t feel like you’re being inundated with a bunch of commercial messages.” He added that it would be “a limited number” of minutes per hour, similar to what users see today on linear TV. And similar to linear TV as well, there will be no skipping of ads – though he noted that because users can watch whenever they want, they could always just pause if they need a break.
Peters said that one key difference between traditional linear TV advertising and whatNetflix is doing is that “we have much more control and insight into who’s actually watching those commercials.” He added that this allows them to be much more targeted in terms of which ads are served to which users. For example, he said that an advertiser might be interested in targeting 35-54 year olds who live in urban areas – and Netflix can deliver on that.
Peters also addressed concerns about whether or not the ads would be intrusive, saying that they would be working with advertisers to make sure that the ads are relevant and non-intrusive. He said that Netflix is planning to roll out the ads gradually so as not to “shock” users.
It will be interesting to see how successful Netflix’s first foray into advertising will be when it launches later this year. Given the company’s large subscriber base and the high degree of control they have over who sees which ads, they are in a good position to deliver results for advertisers – but only time will tell if advertisers will actually bite.
