After their disastrous Q1 earnings call this year, it was inevitable we’d see Netflix move into the advertising tier space. However, the sheer amount of potential partners it’s met with since its April announcement has been something of a surprise. As was their eventual choice of Microsoft as partner. Entertainment lawyer Brandon Blake of Blake & Wang P.A looks at the new announcement.
Google and Comcast
Until last week, both Comcast and Google were seen as the potential front-runners in the battle. However, its Microsoft’s recently acquired Xandr video advertising unit that has taken the title.
While it’s easy to assume the conflicts of interest posed by Comcast’s interests in Peacock and Google’s YouTube links were the reason for the direction change, it appears to be based on other factors. Namely speed of delivery and privacy concerns.
Invasive Advertising
The inherent invasiveness in digital advertising has been under fire recently, despite the overall appeal of AVOD-tier streaming as leverage in the saturated streaming landscape. E.U and U.S regulators are already cracking down on data sharing and collection, even as targeted digital ads become a selling point for streamers to advertisers.
Netflix has a valuable subscriber base, and offering them perceived protection will doubtless be an attractive selling point. Add to that fast iteration through an established tech stack for quick scaling and adaptable strategies, and there’s a solid appeal. Plus, advertisers are likely to love the combination of Xbox, Netflix, and Xandr’s existing TV business as a bundle.
With Netflix already pre-warning of additional subscriber losses before its Q2 conference call this week, its entrance into the advertising-supported arena may well be a lifesaver for the beleaguered streamer. While we still have no clear timeline for deployment, the announcement of the new partnership has already had a positive impact on its stock price, one of the few in recent months.
