When live sports and many prime-time broadcasts were cut out in the middle of the COVID-19 pandemic this spring, streaming services saw like Amazon (WKN: 906866) Prime Video and Disney (WKN: 855686) Hulu and Disney + an opportunity to offer TV viewers an alternative. According to iSpot.tv, spending on television advertising for streaming services tripled in the first half of 2020 compared to the previous year.
And while some of the expected names like Amazon and Disney were at the top of the list, it’s missing Netflix (WKN: 552484) strikingly among the top 10 most advertised streaming services on television. While Netflix’s competitors increased their marketing spend, the leading streaming service provider even cut its total spend in the first six months of the year. Despite the lack of advertising spending and increased competition, Netflix managed to increase its US and Canadian subscribers by 5.25 million in the first half, which is now nearly 73 million strong across the region.
Amazon and Disney spend hundreds of millions.
Amazon spent $ 170 million on U.S. TV advertising for Prime Original series in the first half of the year, according to iSpot.tv. Disney spent even more, over $ 300 million, on its streaming services. Disney accelerated after various states began to impose curfews. From March 12 to June 30, Disney spent nearly $ 200 million. For comparison, Netflix’s total global marketing budget was $ 938 million in the first six months of the year.
Amazon and Disney’s efforts appear to have paid off. During the first-quarter conference call, Amazon CFO Brian Olsavsky said Prime members are making more use of their digital benefits like Prime Video. The streaming hours on Amazon increased faster than the competition in April, which led to gains in market share.
Disney has continued to expand its Disney + subscriber base, which reached over 50 million subscribers worldwide in April. And Bob Chapek, CEO of Disney, was reportedly very pleased with the results of the Hamilton debut on July 3rd.
With a variety of competitors entering the market in recent months, Disney and Amazon are still way ahead of the competition. Your marketing spend could be an important part of it.
Why Netflix doesn’t spend so much on marketing
Netflix has moved away from more traditional advertising channels in recent years. “It’s just a more efficient, effective, and global way to talk to our members,” said CEO Ted Sarandos during the Netflix Q2 conference call. “It turns out to be the best place to go with [Mitgliedern] talking about Netflix is on Netflix. ”
Netflix actually has access to one of the best digital platforms you can’t buy for money – the Netflix homescreen. With the time that subscribers are already there, Netflix can effectively use targeted previews to retain subscribers. At the present time, with nearly 200 million subscribers worldwide, preventing termination can have a significant impact on Netflix’s net additions.
Netflix has also spent a lot of money on award campaigns in recent years. CFO Spence Neumann noted that Netflix has withdrawn this type of marketing spending this year due to the greater uncertainty in today’s environment. He said most of it was temporary, but not all of it.
Netflix does not expect marketing efficiency to continue over the past two quarters. The company saw a significant increase in sign-ups as a result of COVID-19 and is actually planning to spend more on marketing in the second half of the year, although the prospects for net additions are slim.
But with millions of new subscribers already on board, advertising new series and films within Netflix remains a better bet than spending money on television advertising, as is the case with other media companies. As a result, Netflix will have more money to improve its service and stay ahead of the competition.
The post Netflix’s competitors drastically spend more on TV ads appeared first on The Motley Fool Germany.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool.
This article was written by Adam Levy in English and on July 26th, 2020 on Fool.com released. It has been translated so that our German readers can take part in the discussion.
The Motley Fool owns shares of Amazon, Netflix and Walt Disney and recommends the following options: Long January 2021 $ 60 calls on Walt Disney, Short January 2022 $ 1940 calls on Amazon, Long January 2022 $ 1920 calls on Amazon and Short October 2020 $ 125 calls on Walt Disney.
Motley Fool Deutschland 2020