Netflix is taking the advertising experience to new heights by announcing that it will launch interactive midtroll and break commercials, powered by generative AI, starting in 2026.
Ad-supported subscription growth
While this move demonstrates the streaming giant’s commitment to its ad-supported model – which has seen strong growth since its launch in November 2022 – it is likely to raise concerns among those who are skeptical of AI.
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Netflix’s ad-supported subscription now has 94 million subscribers, accounting for half of all new sign-ups.
“Viewers pay as much attention to the advertisements as to the content”
Amy Reinhard, Netflix’s advertising president, emphasized the platform’s high advertising engagement to Media Play News:
“Subscribers pay as much attention to the midtroll ads as to the content itself,” she claimed – a claim that may seem somewhat far-fetched.
AI creatives that imitate the style of the show
The new AI-powered advertising formats will adapt to the look and feel of what you’re watching. Halftime ads and ads halfway through the content will take inspiration from your current stream.
Given the recent Black Mirror episode Common People – one of Netflix’s own productions – this measure seems extra ironic.
More relevant and interactive ad experiences
According to Netflix, this change promises:
- More contextually relevant advertising
- Increased interactivity
- Better opportunities for advertisers to reach their audience
The platform’s own advertising system, launched in the US in April and planned to be globally expanded by June, will lay the foundation for this.
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Goal to double advertising revenue
Netflix aims to double its advertising revenue by 2025, demonstrating a long-term commitment to this revenue model.
The company’s focus on generative AI to create personalized and immersive advertising experiences sets it apart from the competition – for now.
The balance between revenue and user expectations
While the potential for increased advertising revenue is huge, Netflix needs to find the balance between:
- Advertisers’ wishes
- Subscriber preferences (many value ad-free streaming)
- The social and environmental impact of AI commercials
As a Netflix subscriber, one might wonder: What would Don Draper say to this?
Fact:
- Midtroll advertisements: Ads that play in the middle of a program
- Generative AI: Artificial intelligence that can create new content, not just analyze data