Netflix will reach 10 million ad-supported
subscribers globally by the end of this year, with about 30% -- 3.1 million -- coming from the U.S./Canada, according to MoffettNathanson Research.
This growth is slower-moving than previously forecast, when the research company estimated a total of 24 million global ad-supported subscribers.
While we haven't, as yet, revised our prediction that Netflix might attain a 30 milllion U.S. subscriber base in three years the progress of this effort so far is very disappointing. If this estimate---that Netflix's ad-supported platform gets to only 7.4 million U.S. TV homes by 2025 is accurate---and it may well be. This means that Netflix will attain the audience size of a medium sized to smaller cable channel and,, no matter what innovative targeting capabilities it comes up with it will compete for only a small portion of the total TV ad spend pie. Also, if its scale remains small---as predicted---it will have to become more competitive regarding CPM demands---as TV time buyers traditionally penalize low rated channels on their CPMs---- as well as allowing advertisers more freedom of choice about what content their messages appear in ---or adjacent to. Under such pressure, the likely trade-off will be a substantial increase in commercialization to garner sufficient GRPs to off-set the lower CPMs.
All of which causes me to ask whether Netflix has approached this whole concept in a very tentative manner---so as not to offend its core supporter "base". And also, why Netflix hasn't been more aggressive in promoting its AVOD offer to non-subscribers. Perhaps the new team recently installed at Netflix will come up with solutions. We shall see.