Anonymous sources close to Netflix told Bloomberg that the company intends to completely remove ads while streaming children’s content. Several copyright holders already forbid doing so, so the step doesn’t seem critical to ad revenue for the platform, which is developing a new service to manage ad streams.
According to the agency, the company is still working out the strategic and technical details of the denial of advertising in children’s shows and movies, but the decision has already been made in principle.
Netflix is currently developing a new ad service that will allow the company to diversify the way it earns from paid ads. And if there will be no advertising during children’s programs, then on other broadcasts it will appear in new variations.
The company can now only display commercials within its own content, and other copyright holders must obtain permission to do so.
Many don’t give those permissions (besides children’s content producers, most movie studios, as well as independent directors, don’t want publicity in their new movies).
Netflix is actively negotiating with major providers to be able to show ads during the streaming of their products (and not just afterwards, like now).
Sources report attempts to buy content from Sony Group Corp., Paramount Global, Warner Bros. and Discovery Inc. 10-15% more expensive to obtain advertising rights.
Interspersed with ads it will generate revenue of $3-4 billion a year while lowering the cost of a subscription for budget-conscious viewers. If they want, consumers will be able to buy packages without ads.
It is now important for the company to attract a new audience, as it has lost many subscribers since the beginning of 2022. Shares of the service have fallen 65% since the end of November 2021.
Walt Disney Co., Netflix’s biggest competitor in pay-per-view streaming, is also working on a new ad service for Disney+. Hulu, which is majority owned by Disney, already has an ad-supported version.
Both Disney and Netflix plan to show fewer ads online than viewers see live or on most streaming services. At the same time, they intend to charge higher rates for videos than the market average.
According to industry experts, Netflix, without all these innovations, could earn enough from advertising solely within its own content. And therefore they see in the creation of a new advertising service an indication of the desire to build a big business.
Microsoft is expected to provide technical support for the platform in advertising sales. At least in the initial stage.
If successful, Netflix will likely move ad sales into a separate line of business. The corporation is already looking for sellers and the head of the future advertising service.
Author:
Ekaterina Alipova
Source: RB
I am Bret Jackson, a professional journalist and author for Gadget Onus, where I specialize in writing about the gaming industry. With over 6 years of experience in my field, I have built up an extensive portfolio that ranges from reviews to interviews with top figures within the industry. My work has been featured on various news sites, providing readers with insightful analysis regarding the current state of gaming culture.
