Every so often, some analyst points out that Netflix will have to end up including ads and the issue ends up becoming one of those that sneak into the economic and company news. The points that analysts often use to reach their conclusions have a certain logic. Netflix invests a lot of money in generating content – and it did so until not long ago by digging into debt – and the prices of access to its content are not that high.Can you keep up with the pace of content creation that you have followed so far without changing your business model and without putting traditional advertising – from ad pause and ad viewing – on your platform? Analysts who conclude that ads are inevitable end up pointing out that they are not. Those responsible for Netflix, on the other hand, insist that it is and that its platform will continue to be ad-free.Every time the company presents financial results, the topic comes up again. Netflix just did it, presenting the results for its last fiscal year. The data has been quite positive.
Netflix has managed to close 2020 by overcoming, for the first time, the barrier of 200 million Norway Email List subscribers (it is, in the end, one of the companies that are favored by pandemic consumer behaviors in one way or another) and it has succeeded even though the competition has increased. There are more and more VoD services.In 2020 alone, despite this, Netflix captured 37 million new users and now has 203.7 million users worldwide. Despite the fact that the coronavirus has slowed down the production of series and movies, Netflix will not be completely stopped by the grill. It has 500 titles in post-production or ready to hit the market and plans to release an original film each week in 2021.And, of course, when he talks about that, he ends up talking about advertising and competition. Netflix has had to explain to the press in line with its results how it sees the threat from Disney + (not bad, they think there is a market for everyone) and what they expect from advertising.
Reed Hastings, the co-CEO of the platform, has already said many times that they do not think about advertising and those responsible for the platform have repeated it again. Netflix is not going to have ads, but why are they sticking to the ad-free model?Shield the customer experience The key is in the customer experience. Greg Peters, the chief product officer, has pointed out that “the simplicity” of the model with which Netflix reaches consumers “without ads, without additional payments, with a subscription” is what makes it work with the consumer. It’s “very, very powerful and very, very satisfying,” he says. Netflix wants to continue betting on that idea and on those values. Netflix is focusing on producing content – more varied and more diverse to reach a global audience – and thereby retain potential viewers. This is how they position themselves against their competitors.
In short, the company has found a customer experience that the consumer values and responds very well to and is not going to mortgage it. Netflix’s decision can be read, in parallel, as a business vision in line with what matters for the 21st century consumer.They could make more money and faster, but with that they would break the customer experience and its connection with users (and, we can add, not having ‘usual’ ads does not mean that you cannot advertise: there are always alternative formats such as product placement).The big question is, are consumers willing to pay for all this content? A JD Power study of the US market indicates that, right now, the average that each consumer pays for VoD services is $ 47 per month, 24% compared to the beginning of the year, when they paid $ 38.