The men’s football channel, ‘DAZN X PLUTO TV INTERNATIONAL FOOTBALL’, includes live games from top Spanish, Italian and French leagues, plus FA Cup and Coppa Italia games, and exclusively produced weekly highlight shows from LaLiga, Serie A, Ligue 1 and selected cup competitions, also on demand. The Football channel will include a weekly Pluto TV exclusive highlight show called ‘Die DAZN x Pluto TV Fußballshow’.

“With these launches, Pluto TV becomes the only free streaming TV service with 100% dedicated DAZN Football, Darts and Fights channels in these market,” Pluto TV says in a statement. Olivier Jollet, EVP and International General Manager at Pluto TV, says the deal makes sport, including niche disciplines like darts, more accessible to a wider audience. Pete Parmenter, EVP Business Development at DAZN, says the partnership creates even more visibility for DAZN’s “best in class” coverage.

Parmenter adds: “This is yet another exciting partnership that underpins DAZN’s strategy of delivering an ever-increasing range of top-quality sports content to fans on a global basis. This deal increases accessibility and reach for our rights holders’ content, such as the UEFA Women’s Champions League.”

Jollet continued: “This partnership showcases our commitment to providing exceptional content to our audience…We are happy to offer Pluto TV viewers unparalleled access to some of the most prestigious women’s competitions.”

DAZN and Pluto TV have a longstanding relationship, which started in 2019 when they partnered to deliver the DAZN Fight Zone, a three-hour weekly programming block, to Pluto TV viewers in the U.S.

The full channel list covered by the new deal is:

• DAZN X PLUTO TV INTERNATIONAL FOOTBALL (Live on Pluto TV in Germany and Austria)
• DAZN DARTS X PLUTO TV (Live on Pluto TV in Germany and Austria)
• DAZN FIGHTS X PLUTO TV (Available from August 28 in Germany and Austria)
• DAZN HELDINNEN X PLUTO TV (Available from August 28 in Germany and Austria)
• DAZN WOMEN FOOTBALL (Live on Pluto TV in Denmark, Sweden, Norway, France and Latin America).

As a result, there is more pressure on sports rights holders to maximise the value of their investment. The industry strives to offer more personalised entertainment experiences, meaning rights-holders face essential decisions that will make or break their investment when devising the best go-to-market strategies to overcome today’s challenges.

In parallel with the increasing competition for rights is the lowering of the barriers to entry for our entrants into the market. Streaming has opened the door to direct-to-consumer (D2C) streaming operations – look at how Amazon Prime has disrupted the market using the D2C model. Also, for less valuable sports than the UEFA Champions League football, there is an opportunity for sports organisations to cut out the middleman and go D2C.

Adopting a D2C strategy is possible because of the high quality and affordability of streaming technology. However, delivering the content at a premium quality and at scale is a complex process. This is partly due to the increased demands on monetisation in the digital arena, especially where advertising is concerned.

The current advertising landscape

Many ad experiences remain poor for viewers, with excessive repetition and poor execution. In many cases, rights-holders miss out on achieving the highest CPM through a lack of personalisation and measurement.

With a cohesive D2C strategy, sports organisations can create a 360º view of their fans by collecting data on their interactions and spending behaviours. They can then use this data to target customers with relevant adverts promoting specific products, an essential revenue generation tool in today’s market.

Adopting a D2C approach is already finding success, particularly in the U.S. live sports market with the NFL, NBA, and MLB. These sports organisations are offering a strategy that hits the mark with fans. They provide them with greater freedom, choice, and flexibility with their desired content, including access to archived content, real-time stat overlays, social media integration, and live in-game chats. This move has created a fan ecosystem and maximises revenues through personalised experiences.

Market complexities 

However, despite the signs of success, the challenge of complexity looms large. There is a fantastic opportunity for companies to build D2C offerings that deliver high-quality advertising, but factoring in a mix of first-party and third-party sold creates enormous complexity. Third-party require integrations with (often multiple) ad networks. Plus, media companies must consider how to prepare ad content, brand safety, and real-time measurement – as effectively and efficiently as possible.

In addition, to effectively execute a D2C strategy, brands must have the proper technical infrastructure in place to allow them to meet demands. This means a platform enabling them to manage content and digital assets, incorporate broadcast level resilience, and integrate analytics. This infrastructure needs to be flexible enough to allow them to adjust to changes and be able to integrate new technologies in the future.

With the right tech stack, sports brands can embrace the changes in today’s market. By adopting this future-proof infrastructure, brands can improve the digital experience for their customers rather than be limited by legacy monolith systems that have become outdated, expensive to maintain and slow down progress.

Build, buy or partner? 

Scalability, resilience and flexibility are essential in managing such complexity at a mass scale in a live environment where all ad calls happen simultaneously. Identifying the right approach to technology is essential if sports rights owners are to maximise the value of their inventory in an era when the cost of sports rights only increases.

It has been common practice for organisations to have their tech in-house to capitalise. Still, we are now at a stage where media companies are turning increasingly towards third-party vendors as they seek best-of-breed solutions that will allow variation in revenue strategy over the long term.

Competition is increasing, and it’s being matched by complexity. But with the right strategy and the flexibility to deliver it, there is every reason for D2C providers to find long-term success on and off the field.

Vevo represents the music labels, and offers a VOD catalogue of 800,000 titles as well as FAST channels, with its content available through multiple platforms including Samsung TV Plus, Roku, Apple, Amazon and also Pay TV platforms like Sky Q. Vevo on YouTube accounts for a large part of the reach for the music-focused programmer. McGurn describes Vevo as a ‘high reach, low frequency’ solution for advertisers, with that characteristic largely a result of how people watch music videos.

“This is what advertisers come to us for: reach extension with moderate frequency,” he declares. “What is interesting about campaigns on Vevo, from advertisers across consumer electronics to film and auto insurance, is that no matter what you buy from us, we deliver the audience, but frequency never reaches above three. That speaks to the diversity of the video offer. For one advertiser, we had to narrow the reach to dial-up the frequency they wanted, but I think it is a better challenge to increase frequency than deal with too much frequency.”

Vevo has rapidly expanded its FAST channel offering and viewers can now find up to 15 of these linear (ad supported) streamed channels on a typical connected TV platform. This is a lean-back, curated experience and because the channels are genre-based (spanning Pop to Hip-Hop, Country and Latino, for example) or decade-based (e.g., ‘80s or ‘90s) advertisers can reach largely different groups of people via each channel. “There is massive incrementality – as much as 95% incrementality,” reveals McGurn, drawing on research that Vevo presented at the IAB NewFronts in New York.

For consumers, FAST is about removing the decisions needed every four minutes on what to watch next, McGurn says. “It is too much work to constantly choose, and with the curated channels you have passive playback and if you don’t like what is on one channel, you can go to another. We can still keep them [the viewer] on the Vevo network. For us, it is also fun. We like being a curator and that is what the music industry expects from us – we are supposed to be promoters of new music and fandom.”

Asked if Vevo would like to be more than an app on Pay TV/MVPD platforms, in the way that direct-to-consumer streamers like Disney and Netflix are being deeply integrated into the home screen content promotions today, McGurn would only say that “we know our content will be popular wherever it sits, but it is not for us to decide how it should be promoted.” He did admit interest in Vevo appearing within broadcaster streaming (BVOD) services, as some broadcasters start to include third-party content. Vevo is not found in any primary BVOD services yet, “but I would see us as a great content addition in that environment.”

Another part of the Vevo ‘pitch’ to advertisers this year is its increasing understanding of context, down to the detail of what appears within scenes in music videos. This is then used to better match advertising to content. The company already offered mood-based advertising (since February 2021, when advertisers could start buying against moods like ‘heartfelt’ or ‘empowering’, for example). Most recently the company added the ability to match advertising creative to the ‘creative’ look-and-feel of a music video.

Colours, and even the beat of music, can be matched to ads. One illustration shown privately used a music beat and colour-feel that fed exceptionally well into an ad for an electric car. This is better seen than explained, but McGurn gives an example that is easy to imagine: you have an ad creative that is half-human and half-animated, and it might match well against the famous Aha video for Take on Me.

With the help of an AI tech partner, Vevo has also processed its entire music catalogue to find every example where a music video contains a brand representation, whether a coke bottle or a Cadillac car. This has been used to create a targeting package where brands can advertise against the content that contains these images. This is part of a second-by-second analysis of each video to uncover and then label elements of interest, whether logos, items or themes. Advertising packages can also be created for videos tagged with the same keywords – and the example given is ‘beach’ and ‘party’ to create a ‘beach party’ viewing hour, with brand sponsorship available.

McGurn admits the AI-enabled video intelligence does not foretell a tectonic shift in the advertising industry – but it does match advertiser desires for advertising UX innovation. He observes that Vevo can invest in this kind of innovation because its content is evergreen. Sweet Child O’ Mine (Guns N’ Roses) received approximately 200 million views across the Vevo network last year, as one illustration of his point.

“You could not do this with television shows because everyone watches them and then they’re done, albeit with some later binge viewing. With music videos, we know the viewing and the ad revenues will be the same in ten years’ time, using the same insights.”

However, as the market becomes more fragmented, and the increased cost of living hits the pockets of UK audiences, a growing number of viewers are seeking out ad-supported CTV offerings. Two-thirds of consumers state they would prefer watching a free ad-supported streaming service over a fee-based subscription option.

And where consumers head, brands are sure to follow. Marketers spent nearly £1 billion on advertising in CTV environments last year. This growth is only set to continue, with a predicted £2.3 billion being spent in 2026 in the UK alone. At the same time, this expanding market has become a double-edged sword for advertisers. While CTV offers increasing insights and access to more varied and niche audiences at scale, the audiences are watching across a number of platforms — with more options being introduced regularly — creating real challenges for cross-platform media buying and measurement.

With a growing interest in CTV’s potential to enhance the consumer viewing experience while also improving ROI on TV ad spend, advertisers must identify ways in which to measure, and maximise, the success of investments. This is especially true when investing in new channels and for those taking an experimental or staged approach in redistributing spend from linear to CTV — to provide accurate measurements of success, a holistic view across multiple channels must be achieved.

For the TV advertiser, new targeting and measurement strategies, such as those using Automatic Content Recognition (ACR) — when used in conjunction with traditional TV measurements — can solve fragmentation and empower marketers to make smart, data-driven advertising decisions.

Obtaining the full picture of TV data

Traditional industry measurement organisations, such as Barb, have long played a role in understanding audiences, and as TV viewing habits have evolved, so too have their practices. Barb, for example, recently announced plans to broaden its measurement remit to include video streaming platforms in a reflection of increased viewers on these channels. But if advertisers are to understand, and optimise, the success of their investments they will need to achieve a full audience, cross-channel picture, which broader, traditional industry reports alone cannot provide.

Using new datasets such as ACR — a privacy-first, anonymised alternative content identification technology — advertisers can understand a viewer’s content consumption to generate a more detailed picture of their viewing profile. By conducting a ‘glass-level’ analysis of content — in other words, by reviewing everything that is seen on the TV screen — visibility of audience behaviours and preferences is increased.

Marketers are able to analyse not only the audience’s source, whether it be an inbuilt app, games console or other device, but also reveal additional information such as network, show name, and viewing time. Insights like this, gathered from ACR, can also be used to supplement audience segmentation for smarter cross-device media plans.

Unifying data for effective activation

In such a fractured market, the unified, holistic oversight that ACR gives marketers is indispensable. But gathering data is only the first step towards maximising ad spend. Marketers must activate their findings to effectively drive targeting across smart TV and connected devices environments.

Content-level targeting has always assisted marketers to reach their defined audience, but ACR data takes this targeting a step further; ACR is deterministic. It allows marketers to more accurately advertise to niche audiences across various content inputs, via packages of targeted anonymised audience segments.

The ingestion of data across multiple devices and channels means audiences can be filtered into specific demographics — gamers, for example, can be identified based on their gaming-device usage and those insights leveraged to place relevant ads on their smart TV, and other connected devices. Obtaining data diversity is important to enhance campaigns, but achieving it without a robust advertising solution can be difficult. By bringing all audience data under the same roof and layering ACR data with an advertiser’s first- and third-party data sets — such as demographics, geo-location, and shopping behaviours — marketers can build fuller audience profiles in a privacy-compliant manner.

Understanding campaign success

With media budgets under increasing scrutiny, there is a pressing need to measure and prove the ROI of advertising campaigns — especially for TV — and to understand on a granular level the investments which proved successful or unsuccessful, in order to improve effectiveness.

Linear TV has been hampered in the past by its more panel-based approach to measurement and inability to provide for deterministic insights, leaving advertisers with a limited line of sight to actual results. By contrast, ACR offers advanced measurement capabilities — including ad completion rates and conversions such as tune-in, app downloads, web traffic, location behaviour, and even purchase — that allow marketers to better understand the incrementality of their ad campaign.

The ability to leverage deterministic channel and audience data, along with supplementary industry insights, means marketers can not only optimise their marketing activations, but also continue to recognise and invest in the most suitable CTV channels for their objectives and audience.

As the CTV advertising space continues to become more competitive, marketers cannot dive into their investments blind. Granular audience measurement data is the antidote to this, providing a holistic view across input devices — vital to the optimisation of campaigns and audience targeting. While traditional industry measurements can be a strong foundation for creating a successful campaign, supplementing the insights with additional details derived from ACR data will give marketers the vital insights they need.

BARB is the first industry-owned audience currency in the world that Netflix has joined. BARB considers itself to be the definitive, trusted measurement of what people across the UK are watching.

Since November 2021, streaming services have been an integral part of BARB’s gold-standard reporting for linear and on-demand services. Its daily reporting includes aggregate-level viewing to SVOD/AVOD and video-sharing platforms, as well as content ratings for shows on the leading SVOD services. This major innovation has been underpinned by technology developed by Kantar.

From the second week of November 2022, BARB will publicly report the monthly reach and share of viewing for broadcaster groups and SVOD/AVOD services which account for more than 0.5% of total identified viewing. Also from November, BARB will extend its weekly reporting of the top 50 shows to include programmes across all linear channels and SVOD service providers. “This will reinforce BARB’s rankings as the most comprehensive and representative record of the most-watched shows in the UK,” the company says.

BARB observes that broadcasters continue to account for the lion’s share of viewing in the UK. “Across 2022, broadcasters’ linear channels and on-demand services have accounted for around two-thirds of all identified viewing, while SVOD/AVOD services comprise about one-sixth of all viewing. The average daily viewing time to broadcasters’ services was 159 minutes in September 2022, and the average for SVOD/AVOD services was 36 minutes per day.”

Hall adds: “Initial speculation is that the Netflix CPMs are high [confirmed to us in various conversations], and the targeting may not be as advanced [Netflix said yesterday that there would only be country and genre-based targeting at launch for its new advertising tier].” Hall goes on to say that the quality of Netflix’s content and the engagement of its audience is as important as its pricing, and that “Netflix will need to prove realistically how unduplicated the Netflix audience is, and what personalisation and features they can support to compete with Roku.”

Netflix is starting to address measurement concerns. In the UK it has joined BARB, which is considered a definitive and trusted source of what people are watching (as an industry-owned audience currency). BARB has been tracking streaming services since November 2021 and from November 1 the company will report Netflix viewing every day at both a service and a programme level to its clients (as it does for over 300 broadcast channels, BVOD and AVOD/SVOD services).

Netflix predicts an average of 4-5 minutes of advertising per hour, made up of pre-rolls and mid-rolls of 15 or 30 seconds. Ad targeting will only be broad, covering country and genre, and advertisers have been told they will have contextual control – like the ability to prevent ads appearing where there is sex, nudity or graphic violence, etc. Starting in Q1 2023, viewability and traffic validity will be verified via partnerships with DoubleVerify and Integral Ad Science.

The ad-tier will offer video quality up to 720p/HD (matching the non-ads Basic plan). Some films and TV series will not be available in the ad-tier due to licensing restrictions and users will not be able to download titles. Existing plans are not affected.

The analyst firm Omdia recently forecast that 60% of Netflix’s global subscribers will be on the ad-supported tier by 2027. Ampere Analysis predicts that 19.3% of Western European users will sign up to an ad-supported tier by 2027, with most of them coming from Netflix’s existing customer base.

Netflix declares: “Basic with Adverts is everything people love about Netflix, at a lower price, with a few adverts in between. Basic with Adverts also represents an exciting opportunity for advertisers – the chance to reach a diverse audience, including younger viewers who increasingly don’t watch linear TV, in a premium environment with a seamless, high-resolution adverts experience.”

The company adds: “None of this would have been possible without our team’s hard work or Microsoft’s extraordinary partnership. The switch from linear is happening at an ever-increasing speed. We’re confident we have a price and plan for every fan. While it’s still very early days, we’re pleased with the interest from both consumers and the advertising community.”

Linear TV is no longer the standalone video content provider. Streaming services are taking big chunks of viewing time away from broadcast television, and YouTube, with its billions of hours of content, is no different. With the rise of CTV predicted to continue, this trend is undoubtedly going to grow – by 2023, it is expected that over 75% of Western European households will be using CTVs.

With this immense growth in Smart TV ownership, and the rising popularity of consuming YouTube content, it’s about time advertisers asked themselves; could YouTube become their greatest asset?

The decline and inflexibility of broadcast TV

 Linear TV has been in decline since 2013. This has been drastically apparent for the younger generation (aged between 16-34) which has seen a loss of around 60% of viewing from 2013 to 2021. Yet somehow, according to a Comcast report, advertisers should still be looking to use a minimum of 70% of their budget on broadcast television?

Despite an obvious downward trend in consumption of broadcast TV, many advertisers are yet to get ahead of the curve and are still spending big bucks on traditional TV advertising that could be redistributed among other channels to yield a greater return on investment.

Broadcast television has far less choice when it comes to content than YouTube. Whilst there may be multiple channels, each with plenty of shows, this is still dwarfed by the overwhelming amount and diversity of content on YouTube.

This equates to far less flexibility and accuracy in terms of audience targeting for advertisers. Ultimately broadcast TV has a wider audience range in one place, so whilst advertisers might be reaching big numbers, they have very little way of knowing if they are reaching the right audience. Which in turn will lead to lower engagement, and a lower return on investment.

Whereas services such as YouTube have a range of channels and content, all of which come with a niche and focused audience. This allows advertisers to be much more accurate with their targeting and makes their budget stretch much further.

The rise of CTV

CTV provides advertisers with a plethora of opportunities. With 68% of individuals in the UK having access to Smart TVs in their households it must be apparent to advertisers that maximising their CTV advertising will allow them to reach a wide audience.

The number of CTV apps available on the Roku Channel Store, Apple TV OS App Store, and Amazon Fire TV increased by over 38% year-over-year in 2020. This provides advertisers with a wide array of content and services to choose from, allowing them to pick those that align most with the objectives of a single advertising campaign – advertisers no longer need to settle for hitting unnecessary audiences just to reach one demographic on broadcast TV. The opportunity to diversify, and target a specific audience, combined with the increase in popularity of Smart TVs demonstrates why CTV must be seen as a potential primary advertising outlet.

YouTube & CTV – the dream team

When you combine CTV and YouTube, you create the perfect advertising partnership. YouTube’s popularity is continuing to rise, the platform represents 26% of daily video consumption for young people aged 16-34 compared to only 20% for commercial broadcast TV. However, YouTube isn’t just for the young. According to Ofcom in Q1 2021, the total number of YouTube videos viewed by UK online adults was 22% higher than in Q1 2020.

Alongside the reach that makes this combo successful is the flexibility and targeting YouTube provides advertisers. Brands can easily, and successfully diversify their audiences or target a specific group on YouTube due to the vast number of content creators on the platform. Inclusion lists can be created so that brands can reach diverse audiences with their content, and support a diverse range of creators. In a time where social responsibility is key to many brands, using YouTube advertising and inclusion lists means advertisers can add deeds to their words. Significantly, YouTube Ads on CTV drive a 10% greater lift in recall than ads on Linear TV [9] –proof that this combination works!

YouTube and CTV are evidently the advertiser’s dream team. Their increasing popularity and the opportunities they provide in terms of audience engagement and targeting make them a must-have for all brands. To drive home key brand messages, support audiences and of course maximise ROI, advertisers need to be rethinking their budgets and putting great emphasis on CTV.

Other references:

1/ Google/Media Science Lab study, 12 ads, 432 participants. Platforms included: YT OTT, Linear TV. US, November 2018. Google/Media Science Lab study, 12 ads, 432 participants. Platforms included: YT mobile, YT desktop, YT OTT, Linear TV. US, November 2018.

Spencer Adam Neumann, Chief Financial Officer, reiterated: “There are incremental costs [to launching and operating the ad-supported tier] but we believe it will operate at ‘income neutral to positive’ pretty soon out of the gate.”

The big advertising build-out is scheduled for 2023-24 and ad-funded revenues will “start small relative to our total revenue mix,” Peters said. “But we think we can grow it to be substantial over a period of time.”

Netflix expects the ad-supported product to appeal to consumers who are price-sensitive, including people that have never signed-up to the service and those who were members but cancelled. It is also one tool in a wider strategy to convince people to sign-up who are currently unauthorised sharers of someone else’s subscription. “These all represent opportunities for us because we’re bringing a wider range of prices through the ad-supported offering – a lower consumer-facing price to be able to attract a broader set of members.”

The company can launch an ad-supported tier without the need for additional clearance rights, as enough of its third-party (non-Originals) content can be advertised against within existing ‘carriage’ agreements to provide the scale needed. But the company will move to get permission from studios where those additional usage rights are needed, the company revealed on the earnings call. Theodore A. Sarandos, Co-CEO, Chief Content Officer & Director at Netflix, added that Netflix won’t clear its entire catalogue for advertising, “but it’s not a material hold-back to the business.”

Netflix is promising innovation in the advertising user experience and Peters said, “We can deliver an experience which is fundamentally different from the ad experience on linear in a way that supports all stakeholders.” He promised the ad-UX would be very consumer-centric, and would take an innovation-oriented view, with that innovation rolled-out over a period of years, iteratively.

There is a high degree of alignment between what Netflix thinks the ad experience should be and what media buyers are telling them, Peters stated. “That alignment and optimism [from talks with major agencies] is increasing my excitement. I think it’s going to be a win-win for all parties.”

All ads served on Netflix will come through Microsoft exclusively (sales and tech-stack) and Peters said Microsoft’s technical capacity, go-to-market capacity and focus on innovation were key reasons that the streamer has partnered with them. “We are approaching this as an opportunity to collaborate and to evolve the technical capacity and the ad-experience, and the go-to-market approach, over time,” the executive told financial analysts.

He added: “We saw a high degree of strategic alignment in Microsoft’s interest in innovating in the space and really working with us over the next several years to try to create a new ads ecosystem around premium TV. And we’ve seen the long arc of advertising towards a very pro-consumer experience that does not detract from the Quality of Experience, while still having a strong advertiser/brand focus. There has been a lot of alignment on that.”

Peters would not discuss the terms of the deal with Microsoft, when asked if there are “some significant guaranteed revenue commitments” from Microsoft. He was also non-committal on how many ad-supported tiers there might be but did say “we want to keep it as simple as we can from a consumer-facing perspective.”

Not surprisingly, Netflix will launch the ad-supported tier first “in countries that have more mature ad markets where we can feel confident in the ad monetisation.”

Greg Peters, Chief Operating Officer and Chief Product Officer at Netflix, explains: “Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.

“It’s very early days and we have much to work through. But our long-term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.”

Microsoft completed its acquisition of Xandr and its a data-enabled technology platform and solutions in June, strengthening its ad-tech stack. Mikhail Parakhin, President, Web Experiences at Microsoft, says, “Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory.

“All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information. This is a big day for Netflix and Microsoft. We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers.”

Editor’s comment

This deal combines a truly global television service with a single ad-tech stack (and sales house) and so accelerates the globalisation of TV advertising. It creates an ‘easy-to-buy’ premium digital video offer at a scale that few others can match. Disney (with its international roll-out of an ad-supported Disney+ tier) and NBCUniversal, which has created a single buying point for global (as well as local and national) campaigns through its One Platform, are obvious competitors in this ‘global TV’ advertising reach race.

The decision by Netflix to use a single global sales company rather than local representation by existing media sales houses cements the idea that Netflix is still something of an outsider in the TV business (local third-party representation would have blurred the lines between the concept of Netflix as the challenger versus the incumbents, in the same way that the bundled apps onboarding packages with Pay TV operators has made Netflix a ‘friend’ of those companies).

But Netflix has the eyeballs, and the media buyers are going to knock on their door whatever, so the only question is whether Microsoft has the know-how to maximise value for Netflix in local markets.

This deal also jettisons Microsoft into a shortlist of the most important TV ad-tech and sales companies on the planet, and marks something of a comeback in the TV space after the company sold off its IPTV platform/UX business after once dominating the service delivery market for telcos deploying TV-over-DSL services.

In their statement, Netflix treats the introduction of ads as if it was a formality, but even in April they were (at least in public) only considering it, rather than fully committed. So this marks the official announcement that Netflix is open for advertising.

This is the company that led the SVOD market by championing the UX virtues of an ad-free television life. But having hit a ceiling on subs growth, an ad-funded tier could tap a wider potential market for Netflix – and it provides a step-down option for fans of the service who are simply short of cash, before they cancel a subscription altogether.

This move will delight marketers and TV buyers – who view Netflix as a premium and brand-safe environment and now one where they can find consumers who are not watching linear broadcast TV (and consumers who do not frequent ad-funded BVOD or other AVOD).

Buyers have wanted this for a long time. As you can see from this 2016 story, they were ready for Netflix then, and they were already fretting about how SVOD might deny them audiences and so drive media inflation. And that was before Netflix became one of the world’s largest investors in original content.

This is a landmark moment. It is more evidence that streaming will not in fact change the long-established economics of television, which requires advertising to support a good chunk of all content creation and delivery.