Not Ready For Sub-Prime Players?

In today’s media landscape, true success is rare, and relative to even the recent past the bar for what is considered success has lowered to the level of a champion Limbo player.  This was the verbiage of an actual press release from CBS News that came out earlier this week touting the “success” of some its franchises:

CBS EVENING NEWS WITH NORAH ODONNELL is delivering its tightest gap with NBC in adults in 28 years (since 1994/95) and women in 16 years (since 2006/07).

CBS SATURDAY MORNING delivers the tightest gaps ever with NBC in viewers, adults 25-54, women 25-54 and men 25-54, and the tightest gaps with ABC in adults 25-54 in 19 broadcast years (since 2003/04).

CBS MORNINGS is delivering its largest audience share ever for a broadcast year in adults and women. CBS MORNINGS is delivering its tightest gap ever with NBC across all key demos and viewers,and its tightest gap with ABC ever in adults and women.

So we’re now at a level of sophistication and transparency where executives desperate for some sort of spin are now signing off on statements that essentially say “we’re still dead last among our competitors, but we suck less than we used to”.

Apparently, the bar for credible ratings spin has dropped even further than those of the audience levels that are being spun.

It is only in that context that we can give some praise to the folks at Amazon Prime Video, who recently made some headlines with this announcement, per CBS NEWS BAY AREA (you know, part of that gap-tightening juggernaut):

Members of Amazon Prime can pay $2.99 per month in the U.S. to keep their service ad-free, the company said Friday.

Streaming services are in a heated tug-of-war over viewers and users are growing more adept at jumping in and out of those services, often depending on price. The platforms risk losing customers with price hikes, but they could lose them if they don’t generate new content that wins over users.

Disney will begin charging $13.99 a month in the U.S. for ad-free Disney+ in mid-October, 75% more than the ad-supported service. Netflix already charges $15.49 per month for its ad-free plan, more than twice the monthly subscription for Netflix with ads.

Amazon said limited advertisements will be aired during shows and movies starting early next year so that it can “continue investing in compelling content and keep increasing that investment over a long period of time.”

Unsurpisingly, whining and complaining was swift, as NEWSWEEK’s Sophie Lloyd chronicled:

Subscribers took to social media to announce their displeasure at the introduction of ads, with many users threatening to cancel—with not even original content such as The Marvelous Mrs. Maisel, The Boys or The Ring of Power to dissuade them.  

“This is incredibly stupid,” said Sycorax. “What a shambles,” wrote Ninzolow. “Prime is already costly,” said Soni Raj Singh.  “You are planning to charge extra to Prime customers to stop your ads? We are already paying a premium for NO ads,” commented TrolleyDolly55. “Greedy, shameless and odious, that’s Amazon.” “This might be just the nudge I need to cancel Prime,” said James Matthews. “Won’t be keeping my subscription if they implement this,” agreed Crumbs. “Canceling #Hulu because of pricing increase, now I will not watch #Prime. Cable is looking good again,” wrote Anj Marie.”I’ll go back to piracy lol,” said Tired Coder, while @John_Denny suggested that it’s “time to teach them all a lesson and turn it all off.”

I count eight disgruntled subscribers, which I concede these days is enough of a quorum among representatives to remove the speaker of the House that your party controls.  But it shouldn’t be enough to deter Amazon from at least claiming a win here, because in making this call Amazon will, per its Press Center, bring its ad-supported Prime Video universe to just over 67 million subscribers.

As a de facto add-on to roughly 45% of the 148 million estimated Amazon Prime members, Amazon is in the unique position of already being an opt-in.  So pissing off a fraction of them is a small price to pay to actually give them scale with which to sell ads against.  And, at least as NFL Football has proven, there is a proven potential for the platform to deliver enough of them at scale when they do have something worth watching (which, at least per Rotten Tomatoes subscribers, the newest spinoff of THE BOYS, GEN V, is arguably something new on that list).

Contrast that with the histrionics that Netflix has been going through to try and convince their more substantial base of subscribers to create its own ad-supported universe, and the systemic difficulties that even the brilliance of Ted Sarandos is waiving white flags at–and making executive changes in response.  As AD AGE’s Parker Herren and Garret Sloane wrote yesterday:

Netflix shocked advertisers yesterday when it announced the departure of advertising president Jeremi Gorman, who had been leading the streamer’s efforts to bring brands onto the platform for just over a year.  The move comes following a rocky start to Netflix’s ad tier, which debuted in November 2022, just two months after Gorman was brought in to help launch it.  Netflix’s corporate leaders had over-inflated expectations that brands would throw money at the service, according to an advertising consultant who is familiar with Netflix’s ad business and spoke on condition of anonymity. Another agency executive said that Netflix leadership was concerned about the slow start to its ad business, and fretted that Gorman had not staffed up swiftly enough to capture brands.

This summer, Ad Age reported Netflix was nearing 2 million ad-tier subscribers in the U.S., while the streamer has said it reached 10 million global monthly active users on its ad tier, both numbers a fraction of the 238.4 million global paid subscriptions reported in Netflix’s second-quarter earnings.

Netflix continues to drive users toward its ad tier as it cracks down on password sharing with paid profile add-ons per user watching outside of the account owner’s location (priced at $7.99 per additional user versus the ad-supported subscription, which is $6.99 monthly). Netflix also intends to raise the price for its ad-free subscriptions, the Wall Street Journal reported this week, which could drive users to its ad tier as well.

On a global scale, Netflix has twice as many subscribers as does Amazon, but to the ad community, they will soon have nearly ten times more than will Netflix.

And Netflix’s acceptance rate for ads, per a 2022 article from Joshua Thiede of THE STREAMABLE, pales in comparison to that of fourth-place MAX:

Ad-supported video-on-demand (AVOD) subscription tiers have shown their worth as of late with HBO Max revealing that almost 30% of its subscriber base chose their least expensive plan according to a recent eMarketer report.

My back-of-the-matchbook math applied to the most recent public estimates for MAX’s current subscriber count (45 million US, 73.8M global) puts them at about five times the level that Netflix now has.

Our old friend Yosemite can at least claim a moral victory on that front–not that we’ve seen much actual viewership data from of late to suggest that a significant portion of those 30 per cent are watching something they can sell ads against.

Which may be why the speculation from those quoted by Herren and Sloane is that Reinhard, a well-respected content acquisition executive who was crucial in bringing SUITS to the platform, but has minimal ad sales experience, will seek a strategy that will try to eschew trivial issues like eyeballs and CPMs:

Reinhard could help Netflix get brands to integrate into shows and content, beyond the typical 30-second commercial, according to the ad consultant. Premium streamers, including Netflix and Disney+, have been making shows that have brand tie-ins.

“It seems to me that they’re looking for new ways to revive advertiser interest and opportunities, outside just 15- or 30-second ads,” the consultant said. “Brands like getting more for their dollar than just an ad. They like that their brand lives in that show forever.”

I was part of a Sony marketing team that chased such a strategy with streaming originals that were being produced for emerging platforms, such as the MAD ABOUT YOU reboot and L.A.’S FINEST for Spectrum.  We had dozens of “encouraging meetings”, with yours truly repeatedly spinning what little actual data we could put against it in as many creative ways as possible to help our aggressive team try and lock something down.  Let’s just say none of us are around any more to fight the good fight.

So I really do wish Reinhard well, because it’s pretty darn clear that, at least in her corner of the world, she’s got some ground to make up.  And based upon what Gorman experienced, she’s apparently dealing with some impatient superiors, let alone their investors.  And, let’s face it, this is not exactly a window where there’s a lot besides SUITS that’s clicking for Netflix, and is sure seems like the world is burning through it. 

The way I see it, even Ted is seeking out some alternatives.  I guess he read the Rotten Tomatoes reviews on GEN V?

So good luck, Amy.  You may want to think about that gap-tightening release strategy at some point.

Until next time…


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