To The Moon

The ad support program started in early November, and it has been exactly one month now, during which there is the Black Friday e-commerce festival in the United States. Although advertising is a new monetization model created by Netflix, it was launched at the beginning of the recession, and there is still pressure. During the third-quarter earnings conference call in late October, management expressed confidence in the plan.

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However, Digiday’s news on December 15th showed that the effectiveness of Netflix’s advertising may not be satisfactory. The number of users reached by the advertisement within a given period of time is only 80% of the original promise, and many advertisers refunded their remaining advance payments.

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Different from the TV station’s pre-payment model (the advertiser pays the TV station in advance the income corresponding to the advertising exposure effect promised by the TV station, if the exposure rate in a specific period is not enough, it will be made up by the future exposure, that is, the prepayment will not be refunded), Netflix is ​​more humane Advertisers are provided with a method of paying according to the actual effect. If the standard is not met, the remaining prepayment can be refunded.

Therefore, some advertisers choose to get back the previous prepayment, and some advertisers are still optimistic about the long-term effect of Netflix’s advertising plan, and choose to postpone this part of the prepayment until the first quarter of next year.

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Mr. Dolphin believes that, no matter what, for Netflix, one more advertising revenue can reduce the growth pressure brought about by industry competition and economic downturn. However, Netflix’s own advertising distribution capabilities, especially in order to launch ahead of its competitors (Disney+), are at least a quarter earlier than the original plan, and whether its technology is perfect is also the reason why Dolphin was cautious before.

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However, after only one month of launch, the disappointment of advertisers also exceeded our expectations. Therefore, in addition to Netflix’s lack of experience in advertising distribution, Mr. Dolphin is more worried about the overall environment. During this period, there are more and more signs of cooling consumption and economic recession. So although Disney.US has Hulu's advertising distribution experience, the macro pressure is still hard to resist.

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In addition, "Avatar 2" has been released worldwide today, and the overall reputation is not bad. The special effects are perfect, and the plot is a little ordinary. Originally, the epidemic in mainland China was released early, and it is expected to be the first to benefit from the first commercial blockbuster to hit the Chinese market this year. After all, for the last blockbuster film "Avengers 4" in 2019, the box office contribution from mainland China accounted for more than 25%.

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However, mainland China is currently in the early stages of liberalization, and the number of infections has increased sharply. Residents have reduced going out in the short term, and the attendance rate on the first day was only 4.2%. As the peak of subsequent infections continues to break through, it is feared that the number of people in theaters will remain flat compared to 2021, which may affect the box office expectations of "Avatar 2".

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It is reported that the production cost of "Avatar 2" is as high as 450 million US dollars. From the perspective of profit contribution, there is high box office pressure. However, as a blockbuster that has been honed for ten years, Dolphin still expects it to eventually beat "Top Gun 2". $1.5 billion at the box office, topping the list.$Netflix(NFLX)$ 

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