Ellie Riley, Broadcast Trading Executive
Global platform Netflix has seen continuous growth across the last 5 and a half years, and its dominance shows no signs of slowing down. At the end of 2018 Netflix became the biggest paid TV service in the UK, beating Sky, who have dominated the market for the past 3 decades.
To put it into perspective, the latest figures state that Netflix now has 11.62 million UK households signed up to the service. Up to now Netflix has always remained tight-lipped about its audience viewing habits, occasionally releasing top line figures. However, in a surprising move, co-founder, chairman and CEO Reed Hastings has announced that he welcomes Barb measurement of Netflix content.
Measurement through third party Barb, utilising a panel sample, would provide more in depth viewing insights, such as gender, age and demographic. This would represent a significant shift in strategy for the subscription service, so why have Netflix suddenly changed tact on this, and why now?
Competition among pay-TV subscription services is constantly evolving. We have the likes of Now TV and Amazon Prime – who are hot on Netflix’s heels – coupled with the imminent launch of new services, perhaps the most threatening of which is Disney+. Disney+ will see many much loved titles stripped off of Netflix, as it becomes the exclusive home to all Disney content.
Add this factor to Disney+’s lower subscription cost and…could Netflix’s reign be in jeopardy?
— Campaign (@Campaignmag) September 30, 2019
Additionally, the interest in Barb data could be attributed to Netflix revenues – which have been reported as consistently down. Perhaps Netflix are looking at considering advertising to secure additional funds.
This could have a variety of outcomes for both consumers and advertisers. The breadth of content and genres housed on Netflix could offer more niche targeting options for advertisers, and another way to reach younger audiences, who we increasingly see spending more time viewing in an on demand capacity.
However for consumers could the introduction of ads have the effect of driving customers away and into the open arms of its competitors? Perhaps Netflix will consider introducing a tiered payment scheme, similar to the likes of Spotify, where customers can pay a premium to not see the ads?
Could we be on the cusp of an additional ‘commercial TV’ platform?
If so then this would be great news for advertisers. The opportunity to reach the massively sought-after millennial audience, via an ad funded Netflix, must be a serious concern so it will be interesting to see how the main three broadcasters (ITV, C4 and Sky) respond.
At ROM we are excited about the potential opportunities this could open up for our clients. We will be following the story closely over the next few months to see how this develops.