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One might have thought, to judge from the acres of newsprint and hours of airtime devoted to its documentary about the Duke and Duchess of Sussex, that this would be a boom time for Netflix.
Not so.
Shares of the streaming giant fell by more than 8% this afternoon, wiping $11.5bn from its stock market value, on a report that its new advertising-funded service has got off to a poor start.
Digiday, a specialist publication that covers the digital media market, reported that audiences for the service have fallen short of the numbers that Netflix guaranteed advertisers.
It said, quoting five advertising agency executives, that audiences had only been around 80% of the numbers promised to advertisers in some cases and that, as a result, Netflix was offering them refunds on adverts yet to run.
Reporter Tim Peterson quoted one ad agency executive as saying: “They can’t deliver. They don’t have enough inventory to deliver. So they’re literally giving the money back.”
The article said that Netflix had been selling ads on a so-called ‘pay on delivery’ basis: in other words, advertisers only pay the company for viewers who actually watch their adverts.
It said that Netflix has been charging more, per numbers viewing adverts on its platform, than rival Disney+ – which briefly overtook Netflix earlier this year as the world’s biggest streaming platform.
The company has been charging $65 for every 1,000 viewer impressions while Disney+ has been charging $50 for the same number. Digiday said that Netflix has since cut its price to $55.
The article added that, in some cases, advertisers had not been taking a refund but instead rolling over their ad spend to the first three months of next year in the hope that Netflix can build a bigger audience over time.
Other advertisers, though, have sought refunds so they can deploy their ad spend elsewhere during the crucial Christmas season.
The streaming wars
Netflix launched its new ad-funded service last month -…
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