|Ads On Netflix?
By: Michael Lindquist
Since the beginning, Netflix has avoided advertising like a kid avoids vegetables. Netflix's Vice President, Steve Swasey admits that there have been conversations regarding advertising on the company's streaming services, but the arguments for ads are quickly shot down. Netflix relies heavily on its subscribers to pay the bills, and they shouldn't have too much trouble keeping the lights on. Netflix currently reports having over 23 million streaming subscriptions.
Despite the disastrous Qwikster experiment that aimed to divide DVD and streaming services, Netflix has experienced an increase in streaming subscriptions after reverting back to the original DVD and streaming package. The general public was unhappy with the idea of two separate websites and two separate bills for their movies and TV shows. Approximately 800,000 Netflix users cancelled their subscriptions after the price increase and the introduction of Qwikster. Loyal subscribers received a formal apology from Co-Founder and CEO, Reed Hastings. In his apology, he addressed many of the concerns associated with the separation of DVD and streaming services. Hastings went on to explain that the split was to keep improving the streaming service.
In order for Netflix to continue to grow as well as acquire new subscribers and movie titles, they will need more revenue. Hulu Plus maintains a competitive price, but includes advertisements within their streaming content. YouTube has also been using ads as a major source of revenue. How can Netflix continue to offer a quality selection of titles without any advertising? What if Netflix had advertisements? Before you throw your computer out the window, there's good news! What if Netflix lowered the cost for subscribers, had even more titles, and included advertisements?
Audiences at a movie theater sit through more than twenty minutes of commercials and previews before their feature presentation, so would it be so terrible to sit through one 15-second ad followed by a movie trailer or television show preview? This way, brands have the opportunity to narrowcast to the appropriate audiences, and Hollywood can utilize a new tool to promote their upcoming films. No advertisements would interrupt the program, but what if there were one or two ads while the content was loading? It's just crazy enough to work.
It will be very difficult for Netflix to maintain their current price without some form of advertising if they intend to grow. The loyal subscribers have been tested in the past, and advertisements on Netflix would surely turn some people away. However, the use of advertisements would allow the price to remain the same or even drop, attracting more subscribers and allowing Netflix to expand the library of movies and television shows. There has not been any documented proof of Netflix allowing ads on their streaming services, but the conversation has come up. When times are tough and sales are down, the idea for ads may be more appealing. Until then, enjoy your commercial-free content while you can.
Michael Lindquist has a strong passion for art, entertainment, and advertising. As a child, he learned it was okay to color outside the lines, because the lines only restrict your creativity and imagination. Find him online here.
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