by: Thomas Yadron

If you have a Netflix subscription, or if you know someone who does, or if you have been staying updated on media-related news, or maybe ANY news… you’ve probably heard your fair share of complaints about the video streaming and DVD rental company.

If not, sorry for the assumption; here’s my attempt at a quick recap:

A few months ago, Netflix announced it would raise its subscription fees 60% and split its streaming and DVD services into two separate companies: Netflix for streaming; Qwikster for DVDs. Each would require separate account information and payment. After receiving the inevitable backlash from its industry-leading customer base, Co-founder and CEO, Reed Hastings, sent an email to subscribers apologizing for the way the price hike and split was delivered and attempted to explain why the company thought it necessary. Though the email had an honest and sincere appeal, it failed to point out how the change helped its customers. After amassed complaints and dropped subscriptions, Mr. Hastings announced that the company would abandon the creation of a separate DVD rental company, and both services would remain under the Netflix name.

All of this left Netflix subscribers confused, frustrated and tempted to move to other available streaming outlets like Amazon or maybe even the new Blockbuster Movie Pass. As a result, Netflix’s stocks and subscriptions decreased dramatically in the third quarter.

Though Netflix’s current problem cannot be solved by any one solution, an article on http://ohdigitalmedia.blogspot.com noted an interesting trend concerning the premium online streaming industry in general: advertising is just about nonexistent. In fact, Netflix does not sell any advertising space at all.

For a site that represents “32 percent of all online traffic,” this seems unbelievable. But Netflix is not alone. In fact, Hulu is “the lone service to sell ad space alongside ultra-premium content” according to the blog.

It’s up to Netflix to decide whether they want to revert to advertising (maybe in the form of the :30 spots seen on Hulu), or focus on first building up reputation, avoiding a move that could possibly make an already rattled customer support base even worse.

Either way, as premium online streaming gains popularity and becomes more prevalent while the technologically savvy, millennial generation grows up, it seems inevitable that companies like Netflix and Amazon will soon have to make friends with Madison Avenue if they want to stay afloat.

For a more in-depth look at advertising and premium online streaming check out http://ohdigitalmedia.blogspot.com/2011/10/netflix-effect-how-netflixs-lack-of.htm

Sources:

http://ohdigitalmedia.blogspot.com/2011/10/netflix-effect-how-netflixs-lack-of.html

http://adage.com/article/mediaworks/netflix-subscriber-loss-worse-forecast/230617/

 

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Written by Ad Buzz

The American Advertising Federation Illinois Chapter brings to you Ad Buzz, a blog dedicated to all things advertising related, from our favorite campaigns to trends going on in the industry.

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