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Once upon a time, Netflix sent DVDs through the mail to customers, and those customers rejoiced. Customers didn’t have to leave their homes in order to watch their favorite movies. This concept basically put Blockbuster out of business.
Fast forward a handful of years, and Netflix is now a streaming service, providing customers with hit movies and engaging programming that had customers saying “Did you see such and such?” and “Such and such show is sooooo good.” Netflix was trying to put linear TV out of business too.
Then there was Hulu, and Paramount, and Discovery, and Disney and Amazon and on and on and on. Netflix wasn’t the only game in town anymore. Content was all over the place.
Netflix faced a situation that all content providers were facing…continue doing what we’re doing (which was charging customers a monthly subscription price) or head into the advertising world to compete (which all other streamers were doing already).
They made the decision to change the model and make money from subscribers AND advertisers. The thinking was since it was Netflix, and everyone loved Netflix, that this would be a home run.
But it wasn’t.
The latest reports show that Netflix has lost their way a bit, meeting only about 80% of audience guarantees on their deals. Instead of providing make goods or ADU’s (audience deficiency units for those that only know linear) they gave money back to the advertisers.
This is a big deal. Not because they are changing up the process of traditional advertising, but it’s also telling of the state of Netflix, and the streaming world as a whole.
Streaming isn’t the brass ring for advertisers anymore. It’s just another crowded channel, with too many options, too many issues, too many unknowns. Content is suffering and there are less “must see” programs than there were even 2 years ago.
Streaming services should still be a part of the media mix, but advertisers and strategists need to make sure that they are paying for the right mix, the right content, the right streamer. Or you’re gonna be left with unspent money and broken promises.
In the coming weeks, we will discuss what Netflix plans to do next. Stay tuned!