National TV Advertisers Want More Streaming Reach, But Won't Get It From Netflix

Netflix has found a possible way to increase revenues by $1.6 billion -- and it has nothing to do with adding an advertising option.

Just charge accounts a couple of bucks for those current account holders who share their passwords with people outside their homes. One Wall Street analyst, Cowen & Co.'s John Blackledge, thinks Netflix could add a not-so-inconsequential $1.6 billion a year -- that's a bump of sales by 4%.

In a test with three Latin American countries, Netflix users will be allowed two extra member accounts for around $2 to $3 per month each on top of their regular monthly fees.

In the U.S., one survey estimates 2,500 consumers -- about 10% of the country’s 116 million broadband households -- include someone who watches Netflix but is not paying a subscription fee.



Netflix has already tiptoed into this area when it began recently to add video-game content -- to draw in young TV-media customers. Right now there isn’t a charge for any of this, but that might be coming.

Netflix could be exploring other ways to gain revenue beyond the extra earnings from password sharing. But not from advertising.

Netflix is adamant that will not consider an advertising option -- although other analysts, including many media agency-buying execs, believe the subscription video-on-demand service will almost certainly have to turn to some form of advertising as its rapidly growing business slows to modest gains.

We can understand why. All TV marketers are desperate to find incremental reach.

Nielsen tells us that 28.7% of total day TV viewers are regularly tuning in to streaming platforms. But only a fraction of that comes from ad-supported services. That is because the likes of Netflix, Disney+, Amazon Prime Video, and HBO Max (no advertising) are taking up a majority of that streaming viewing time.

This isn’t to say things are not changing -- ad-supported Hulu, Pluto TV, Roku, Tubi, and others continue to grow. Even so, there isn't much valuable TV-movie advertising inventory to go around.

Indeed, one MoffettNathanson Research analyst believes TV marketers looking for that extended reach are already hitting up the likes of Google, Facebook and other digital media heavyweights to get those extensions -- that only around 50% to 60% of that “lost” linear TV ad spend is going to the big AVOD platforms.

With modern streaming platforms looking to diversify their revenue sources, don't expect them to serve al the needs of legacy TV-video marketers.

Next story loading loading..