EconomyWhy is it convenient for Netflix to put advertising...

Why is it convenient for Netflix to put advertising on its platform right now?

Netflix set off alarms when it said it was considering adding advertising to its platform. The reason? Cope with rising costs without having to pass on the entire increase to the price your subscribers pay for accessing your content. In this way, what was a differentiator will now be in the background.

Are the ads the safe conduct to access good quality and free content? This is one of the questions facing the big players in the industry. The truth is that this increasingly latent possibility generated a debate that affects both consumers and advertisers. How will this be received by different generations of viewers? Will the business model of content streaming platforms change towards something more hybrid?

Beyond the Netflix announcement, this is something that was coming; advertising was beginning to enter through the back door in spaces where, apparently, it was not so frowned upon. And, above all, rebuilding a historical place that it always had and that seemed to have been taken from it.

Currently, figures from the global data analysis company YouGov reveal that Netflix has 51 million subscribers in Mexico, which is equivalent to almost 63.4% of the adult population (80.4 million).

In addition, David Eastman, managing director of YouGov Latam, reports that 44.4% of those surveyed who are Netflix subscribers agree that the platforms should not care if they share their subscriptions and user credentials, while 32.9% did. indifferent. And about how much people enjoy watching ads, 45% made it clear that they don’t, but 32.1% don’t care.

Martin Perelmuter, head of sales Latam at Yahoo, assures that with the older generations there will be no major inconveniences if the streaming platforms incorporate ads into their platform.

“They are already used to putting up with the batch. On the other hand, the youngest are more anxious. Therefore, we must take into account the duration, the context, the theme. It will be imperative to target the data by age and contextualize it at the level of behavior and content. Failure to do so is likely to affect brand perception. Each contact must be personalized, short and relevant”, he maintains.

matter of habit

Jesús Mejía, a technology specialist, considers that the arrival of the ads will not be so well received by users, since they pay for a streaming service for a reason and migrated from television to platforms, in order to avoid ads and be able to focus on your entertainment.

Being a player at a global level that raises the possible incorporation of advertising in the world of streaming , the specialists from YouGov and Yahoo consider that once the ads are inserted they will be accepted and little by little the viewers will get used to the new Format.

“In Latin America we believe that the advertising model is going to prevail, since there are many people who do not have access to banking services,” says the Yahoo executive. “Although Netflix hopes to meet some resistance to ads, by adding a cheaper or completely free membership model, it could gain a lot of users. The industry had predicted that this fatigue of streaming services would happen soon because there are so many players,” says Perelmuter.

In addition, a difficult economic situation is being experienced, only in Mexico the inflation rate exceeded 8% at the beginning of the third quarter of the year. Consequently, many people can no longer afford to own or maintain some streaming services.

In that sense, specialists reiterate, Netflix’s move makes even more sense and potentially adds more money to the business by diversifying income.

In terms of branding , the forecast on ending password sharing is that users who pay for their membership will start to see even more value and perceive Netflix as a premium brand, even more so than before.

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