How expensive can Netflix get?

I saw him while running. A man with a metal detector rummaged around the dog walking area, looking for something precious among the droppings. I still wanted ‘good luck!’ yelling, but before you know it you’re having a conversation. In my mind I called the man with the detector a symbol of an evening watching TV; rummaging through a hundred channels full of advertisements, exhausted formulas and exhausted celebrities. Zap until you weigh an ounce and find something you like.

Since this year, one million of the 8.1 million Dutch households no longer have a regular TV subscription. The army of subscribers has been growing since 2014, a year after Netflix started its video service in the Netherlands; watching TV the way watching TV was meant to be, on demandwithout advertising, affordable.

Netflix initially cost 7.99 euros per month and increased the prices to continue investing in new productions. Now you pay 12 to 16 euros per month – depending on the image quality. More price hikes are coming, such as for subscribers who share their account with people outside their household. Until now, the Netflix police have condoned those gray eyes.

The stalling growth figures show that the streaming market is becoming saturated. Netflix had good – and cheap – competition, such as Disney+ and HBO Max. And then you have Apple TV+ and Amazon Prime. They play a different game; they make a profit from other products and use their video service as a decoy, one that earns Oscars.

Disney+ and HBO Max want to offer cheaper subscriptions with ads in between. That formula works. Videoland has been offering an entry rate with advertising for two years now. Last year, Videoland grew by 20 percent to 1.1 million subscribers – they promptly received a price increase as a gift this year.

Netflix is ​​hesitant – it doesn’t want to show ads, but it can’t keep increasing prices indefinitely. There is product placement (hidden sponsors in series), but commercial breaks are prohibited. Until Netflix’s financial director Spencer Neumann said last month: “Never say never.” If a CFO says so, the plans are probably already in place.

Netflix has detailed behavioral data of 222 million subscribers and knows which genres, actors and scenes you like. Recommendation algorithms divide viewers into bite-sized flavor clusters; the advertising industry benefits from that.

Advertisers find themselves limited in the possibilities of targeted advertising on telephones and computers. Apple cut the way apps track your behavior on the iPhone. Google, in turn, wants to reduce tracking in Android. Cookies are being restricted on the web and the EU wants to ban social media from showing advertisements based on information about a person’s gender, skin colour, religion or political opinion.

The popular measurement tool Google Analytics is also under attack. If you can no longer accurately measure who sees your ads, advertising becomes old-fashioned guesswork. Or shooting with hail at best – like advertising on TV.

Video services know more about their internet customers than about regular TV viewers. The old generation has not died out, by the way. The Netherlands has 3.9 million households who watch TV via cable, and another 3.5 million viewers via fiber optic, DSL and satellite. Half a million people watch online via NPO Plus. NLZiet, (NPO, RTL and Talpa), had 200,000 subscribers in 2020. NLZiet is also considering a version with advertising.

Complicated? Yes. Watching TV may be cheaper, but not easier. The TV of the future will soon be as cluttered as before, including commercial breaks. I’ll probably run into the man with the metal detector again, desperate for something valuable. Not zapping through channels, but searching in all streaming apps. Good luck!

Marc Hijink writes about technology here. Twitter: @MarcHijinkNRC

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