Can the TV advertising market ‘chill’ with developments over at Netflix?
Opticomm’s Broadcast Director Nicky Legg takes a look at developments in the fast moving VOD market and how it might affect the TV market.
Anyone who has a Now TV subscription will recall last year’s sudden change and ‘experiment’ with ad placement into content streams. While this can be negated at a cost, it looks like the hybrid model is here to stay and is being considered even by the most fervent anti-ad services…namely Netflix. Netflix CEO Reed Hastings told his employees just after their first quarter report that this model could in fact be with us by the end of the year.
So why is Netflix looking at it such a big deal? Namely its sheer size! (see fig1)
The business model Netflix moves to and the level of targeting possible will really dictate what effect it will have. The challenge to broadcast linear activity is probably a distant one despite the reach capabilities, when compared to linear CPT’s even on ITV prices, which are likely to be twice to three times the cost per thousand for large broadcast audiences. By adding a video reach capability to Netflix users who don’t watch linear TV, a demonstrable effect may be feasible.
It’s clear there is a real difference and opportunity when it comes to age. Targeting older audiences at volume for reach and awareness goals will be much more efficient than using more traditional linear channels and models. However for younger audiences, if Netflix can hold their audience reach, integrate advertising and get a competitive price they may just have the magic key. No other commercial provider can come close to their reach and even older audiences only deliver more in the 65+ market. (see fig3)
While it appears that VOD providers have nothing to relax about, if you are targeting 20-45 year olds you can anticipate chilling just a little bit.