COMMENTARY

Netflix Brand with Advertising: To Be Tainted?

• by Wayne Friedman , Staff Writer, October 13, 2022

Netflix may be going in reverse -- from a “premium” network to something that may be less glitzy.

Advertising-free TV content has always meant “premium” TV programming to some. This could stem from what non-advertising premium cable TV networks have been for decades -- like HBO and Showtime.

Netflix is now moving its premium brand into the ad-supported world -- and that could mean trouble, says Jeffrey Wlodarczak, principal/senior analyst of Pivotal Research Group.  It could cheapen the brand.

Ramping up a new advertising-selling cable TV network is an understandable move -- to boost overall revenue growth to complement affiliate revenues.

What Netflix is doing goes in the opposite direction -- especially for a company that continues to lead all competitors in the streaming field.

In addition, it has partnered with Microsoft Corp. -- a technology company with an unproven reputation when it comes to video streaming, according to Wlodarczak.

We are reminded of similar cable TV networks in the past making similar transitions. Earlier on, the American Movie Classics started out in 1984 as an ad-free service, then slowly shifted to one selling advertising time.

Starting in 1998, it began selling limited advertising. Under the brand name AMC Network it grew to feature big critically acclaimed TV shows like “The Walking Dead” and its spinoffs; “Better Call Saul” and  “Breaking Bad”, and before that -- “Mad Men”.

Recently -- and somewhat more quietly -- HBO also made a shift under its streamer sister operation HBO Max, with an ad-supported option.

HBO had been the long-time purveyor of “premium” no-advertising content. The jury is still out on what -- if any -- effect TV commercials have had on HBO Max's content.

The bottom line is that consumers might view TV content in many different buckets these days -- especially when they have not only a wide range of streamers in considering purchase, but many viewing options under each streaming platform.

Someone please define the word "premium" for Netflix. While Netflix has some high-flying critically strong shows, not everything on the platform gets great critical acclaim. With regard to that, would you call that cheap?

Here’s another consideration -- at least how Netflix views its upcoming advertising option: Reports are saying Netflix is asking for a massive premium of $65 cost-per-thousand viewers (CPMs).

We'll see whether brands agree with that definition now.