26 ms·

Netflix Should Sell Ads

96 points by jger15 5y ago

g-technology 5y ago
Netflix already has ads. They just don't look like normal ads because they are product placement in Netflix created content. Which I don't mind as long as it doesn't turn the show or movie into a long commercial.
Lurkynerd 5y ago
We're coming full circle again. Netflix was the reason to stop pirating content, and now Netflix is the reason to return to piracy. And to reiterate what many have already said, this perpetual growth and scale mentality is so so toxic.
Finnucane 5y ago
I still subscribe to the DVD by mail service. If Netflix had ads in streaming content, we'd use that more.
scotuswroteus 5y ago
Why Stratechery aspires to be an industry rag but the guy can't write well (2239 of 2239)
- masterof0 5y ago
  Because asking a company to put ads on a product their already charge for, is such a sophisticated and unique take, dunno how this guy doesn't have a Pulitzer already. I don't think 3 dollars less of a monthly subscription justifies a truckload of shitty ads. Disgraceful.
sys_64738 5y ago
I don't pay for ads, I pay for streaming.
hoseja 5y ago
This, right here, is a piece of pure crystalline corrosive evil.
version_five 5y ago
They may be able to make more money this way. To me this is akin to explain why we should be strip mining or clear cutting more. It works from a scorched earth capitalism perspective, but doesn't leave is in a good place
- PaulHoule 5y ago
  Subscribers are more valuable people to market to than non-subscribers because they've already qualified themselves by proving they'll spend money for something.
  - AnIdiotOnTheNet 5y ago
    A big part of that something is not wanting any goddamned ads though.
    - robbedpeter 5y ago
      Ads are by their very nature derogatory to anywhere they are placed. Ads never add value to any experience. They always take time and attention from the viewer's intended activity. Not all product information is advertisement.
      - cupofpython 5y ago
        Netflix could have gotten away with ads a few years ago maybe. Not now with all the competition available. their content is relatively weak tbh now that a lot of the classics have moved to other platforms. I'd be gone immediately
        horsawlarway 5y ago
        I don't think they could have, even then. Competition was incredibly fierce, it just came from cable TV. The main subscriber base for Netflix was essentially folks who didn't want to see ads, and were willing to ditch cable tv for that experience.
KerryJones 5y ago
This changes the brand of Netflix considerably. While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads. I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company.
- aidenn0 5y ago
  It is also non-trivial to implement in a way that supports older devices; I can't watch ad-supported prime video channels on my BluRay player, which is rather annoying.
- giobox 5y ago
  > While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads In credit to YouTube and Hulu, they give you the option to go ad free, or in the case of YouTube pay nothing at all. Have cheap price and ads, or pay a little more and get the ad free experience. I happily enjoy ad-free Netflix, YouTube and Hulu. > I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company. If you have read the article and try to respond to the authors points more directly, he is making a pretty compelling case as to why this is not short term thinking at all - subscriber growth is effectively over for the company now in the near term, there are little new customer households left to sell a subscription to for Netflix, which is of course why we are seeing more frequent subscription price rises too. On the contrary, he is laying out a long term strategy that may still deliver growth, something subscriptions increasingly won't as subscriber growth continues to inevitably fall. As YouTube and Hulu both prove, one can have ad-supported and ad-free subscription tiers on the same service, and I suspect is likely the path Netflix would follow if they pursue such a plan in future. While as an individual you may not like ads (thats fine!), the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business, which so far has been price rises...
  - 5y ago
akagusu 5y ago
Will it be free if it sells ads or will people pay for the privilege of watch ads?
mrlonglong 5y ago
Do that and I will end my Netflix subscription.
- medler 5y ago
  The article describes a multiple-tier model, where people like you can pay for an ad-free experience, while more price-sensitive consumers can get a cheaper subscription supported by ads.
  - c0nducktr 5y ago
    - stavros 5y ago
      Then they can get the cheaper/free tier, with ads. Is that not better?
- boffinism 5y ago
  As a subscriber you wouldn't see the ads, though.
axg11 5y ago
There's a wider dilemma at play for Netflix. As the article points out, they've reached a point where their main product (paid streaming) has saturated the market. They won and there's not much more to be gained there. Options for their next move essentially boil down to: (a) expand into "other bets" (e.g. games) (b) compromise on the quality of their product and brand by selling ads to gain incremental revenue (c) give up on growth and be happy with a large, sustainable business They are openly pursuing (a), which is the ideal outcome. Ideally they can even launch gaming or some other form of entertainment as a separate subscription, helping to diversify their revenue. I see (b) as the backup plan. If they're not able to diversify into another revenue source, their next best bet is to compromise their existing product and extract the final bit of juice using advertising. Some number of customers will drop down from paid to free, and that number is difficult to model. Netflix could also end up shooting themselves in the foot by introducing ads, if that convinces the whole industry to do the same. In the long run that will reduce margins for all. Finally, (c) isn't compatible with the type of capitalist society we live in. Sometimes a company has peaked and that's OK.
- michaelbuckbee 5y ago
  Beyond pursuing, right now, if you log into the Netflix app on your iPhone they have a Gamepass/Apple Arcade style set of game that you receive alongside your subscription.
  - orhmeh09 5y ago
    Indeed, I played a round of a game made by Trivia Crack last night. It was my first time and I think it’s a new addition? Just popped up on my Home Screen yesterday.
zck 5y ago
I think people are missing the suggestion of this article. It's not suggesting that Netflix adds advertising to the existing subscriptions; it's suggesting they add a lower-priced subscription supported by ads. >...it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers). If they kept the existing $10/$15.50/$20 plans the same (https://help.netflix.com/en/node/24926 https://help.netflix.com/en/node/24926), but they add a $5 ad-supported subscription, that's not changing anyone's experience, unless they choose to switch.
- buffington 5y ago
  Everyone's experience changes when a company begins to consider ad revenue. How those changes shake out is hard to predict. It's not a stretch to suggest that even little things change for everyone though. Adding ad revenue changes how a company thinks about nearly everything, whether they're aware of it or not, and ultimately the end user suffers. For example, Netflix would likely start trying to tweak content discovery in a way that benefits advertisers. Rather than show me content that matches my historical interests, they show me content that optimizes ad revenue as well. It's unlikely they'd maintain two different "ad-free" and "ad-full" recommendation algorithms. Motivated by pressure from advertisers, Netflix might be less inclined to produce or provide content that made advertisers uncomfortable or benefitted an advertiser's competitors. When producing content, they now have two bosses: subscribers, and advertisers. Both have entirely different expectations. Those expectations push Netflix into making compromises, and rarely do those compromises produce outcomes that are better than if they only focused on making one side happy.
  - zck 5y ago
    This is a fair critique! It's just more nuanced than "I don't want to watch shows with ads".
    - formerkrogeremp 5y ago
      And we'll being going to piracy if we had to watch ads on top of paying a monthly fee. This would be ridiculous. There's advertising almost everywhere else. Why do we need more advertising?
Ancalagon 5y ago
As other commenters out this seems like horribly short term thinking. The reason I subscribe to Netflix and Amazon prime and NOT to Hulu or YT is because Hulu has ads (prime has internal ads I suppose, but I’ve always been able to skip those unlike YouTube). I understand content generation is expensive. Maybe Netflix needs to expand more on the IPs they currently own? Merchandising and such (how about a LEGO/Stranger Things crossover anyone?) Differential pricing models for other countries would make sense too. I’m sure the board has thought of all of these and none are particularly easy, but putting ads where they don’t belong would ruin their brand.
- michaelbuckbee 5y ago
  Both Hulu and YT have premium (mostly) ad-free experiences. I say mostly as the line gets a little blurry with cross promotion of other shows on the same service.
  - Ancalagon 5y ago
    Yeah and I think this blurred line of ads vs no ads damaged their brands at the onset as now I associate them with old school cable tv, which is what I was trying to escape.
buffington 5y ago
If Netflix introduced ads I'd cancel immediately, even if my paid plan didn't show me those ads.
_8j50 5y ago
You know how there are so many nice posts that make you go "I would want to buy this person coffee/beer if I could.", I feel the exact opposite towards this person. People like this are why shitty services like Hulu exist and why cable TV charges you $200 and is 70% (at least) ads! I will pay netflix more than any cable company because the quality of their content. Exploitative capitalism at its finest. Shortsighted greed with no room for imagination. I can spend 15 min and come up with at least 5 ways to charge customers more without needing to sell them ads. I don't care if it costs $0.99 I will cancel if they have even one ad and I will pay up to $2-300 for no ads (including for other users because it creates a perverse incentive to collect user data and sell anyways). You want cheaper with ads? There is a myriad of services that provide that (although the cheap part is rare!)
- deleted 5y ago
  [deleted]
- rosndo 5y ago
  > including for other users because it creates a perverse incentive to collect user data and sell anyways Huh? I don’t see Facebook or Google going around selling user data, it’s secret sauce they want to protect. Why would netflix sell user data if they start advertising? Wouldn’t that be more likely in a world where user data isn’t otherwise a major revenue source for them? (Although collecting user data is clearly already super important for netflix as they use it to design their content)
  - _8j50 5y ago
    Because to netflix it is supplemental income, to fb and google it is their main income. Google and fb run their own ad network as well. Why would netflix not sell your interests in movies and habits to allow better targeting in their platform? If you get a no ad experience, why waste the opportunity? Sell it to others so they can target you elsewhere. That is, if they go down the ad road.
    - rosndo 5y ago
      > Why would netflix not sell your interests in movies and habits to allow better targeting in their platform? Why would they need to sell that data to allow better targeting? Doesn’t make sense. > That is, if they go down the ad road. Why would adding ads to Netflix force them to do these things that they would already be perfectly capable of doing? Netflix collects tons of data, could sell it if they wanted.
horsawlarway 5y ago
I don't normally mind stratechery, but I think this one is a complete miss.
- vanilla_nut 5y ago
  I mean, he's... technically right? Netflix could start showing ads, and increase revenue (either from creating a lower price tier that encourages more adoption, or by adding ads to the lowest price tier to increase revenue). Of course, that's also the same logic that hundreds of tech companies have already "figured out" about ads. And it always ignores the knock-on effects of ads seeping into other price tiers, of ads taking priority over other features, etc. etc... that eventually destroy entire platforms and pieces of software.
  - err4nt 5y ago
    It won't increase revenue if a large chunk of the currently subscribed-for-life people bail, it'll be eternally forfeited profits. Just as a thought experiment - how many people currently subscribed would be subscribed for 30+ more years if they could just maintain what they have been doing for 30 years? The potential lifetime revenue is so huge it is a shame any time they do something that makes a lifetime subscriber bail on 30+ years of subscription payments without a second thought. It's like they have the fish on the hook and they're debating if they can catch more fish by cutting the ones they have loose.
dddnzzz334 5y ago
I am just gonna stick to Piracy. I will continue get superior service while legit payers will continue to suffer.
chrismeller 5y ago
“This post contains product placement”
- nickduggets 5y ago
  Now I'm scared of two things. 1) Netflix will start using product-placement in their original shows to boost revenue. 2) They're already doing this and I just haven't noticed.
bfrog 5y ago
The day Netflix has ads is the day I cancel
vonwoodson 5y ago
Boo that man! Booo!!! Booooo!!!
_tom_ 5y ago
Classic clickbait. Post a terrible idea, that gets people angry, and they click through. Ignore this and don't click.
- pankajdoharey 5y ago
  If Netflix starts selling ads then only Netflix executives will watch the shows, everyone else will cancel their subscriptions.
  - deleted 5y ago
    [deleted]
  - MisterBastahrd 5y ago
    Yeah, the quality of a lot of Netflix shows just feels inferior to other platforms.
  - bigiain 5y ago
    I'm happy to go back to using BitTorrent for everything if they insist on making the experience of paying for shows worse than pirating them.
  - ComradePhil 5y ago
    You say that but people have been watching cable TV for decades.
    - Twisell 5y ago
      Maybe the key point being that they are a different audience, Netflix users seek something else. Copy cable TV business plan and theses users will just migrate elsewhere. Way to shot on your own foot.
    - lnxg33k1 5y ago
      Speaking of cable, if the quality of Netflix produced content would be comparable to the one of hbo or Disney I would even consider paying for it and watch ads. But I think Netflix subscriptions are going down because m, at least in my personal experience, the content is just offensively stupid, banal, childish and poor. Maybe the first step should be to product stuff that makes sense
chadlavi 5y ago
Not today satan.
imgabe 5y ago
You know what doesn't have ads? Pirated content.
- charcircuit 5y ago
  To be fair there are plenty of piracy sites that do include ads on the web page.
  - shmde 5y ago
    HN crowd uses Ad-blocker.
- littlecranky67 5y ago
  Unfortunately, even this changes. Lots of uploaders add subtitles, that pop up 2-3 times during a show "To download more movies, visist our site XXXX".
  - shmde 5y ago
    Did you just compare a Video Advertisement which takes over the whole screen to a 2-3 second Subtitle Ad which happens at the end of the movie ?
    - littlecranky67 5y ago
      Well, it all starts somewhere. I am old enough to remember when private TV started in Germany in the 80s/90s - a 90 minute movie had exactly one ad break of 2-3 minutes. From there it "evolved" into 3-4 ad breaks, overlay ads mid-show, plus HbbTV overlay. Same holds true for the Internet. In the 90s, there were 1-2 banners (animated GIFs), tops. It also evolved into intrusive tracking ads with flashy videos, sound etc. My thesis is: Because you always get used to the ads and start to sub-concisely ignore them, they get more and more obtrusive to counter that effect. Its a race to the bottom, and my observations that I described above back this thesis.
GoodJokes 5y ago
fomine3 5y ago
Comments looks like the HN bubble. I think OP is reasonable for strategy, regardless of ads hate.
onion2k 5y ago
I agree. Netflix should sell ads. But... They should play them after you've watch an episode of something, and the "Play next episode" button should immediately skip the ad. The ad volume should be normalized to the same as the episode (or lower), and the ads should have to match the same production specifications as Netflix shows. They should be like small, very short, unobtrusive films that advertise something. So long as I remain in control of what I'm watching, I don't have to watch an ad to access content, the ad is high quality, and the ad comes after the thing I chose, then I'd accept ads on Netflix in the same way I would accept a trailer for a Netflix show. I imagine that bar is probably set too high though.
- wodenokoto 5y ago
  Some of us would like some silence when a movie or an episode finishes. Currently, the auto playing of trailers is bad enough as it is.
  - hericium 5y ago
    You can turn it off somewhere in profile settings on netflix.com
    - burntwater 5y ago
      I've found it to be very inconsistent. I've found that typically episodes will play credits and not auto-forward to the next episode. Movies will sometimes skip credits and move to trailers, sometimes not. I feel like usually they move to trailers. And movies is when I MOST want to watch credits and reflect on the movie, so Netflix is literally doing the opposite of what I want.
    - wodenokoto 5y ago
      Not really. You can turn off auto-skipping to next episode, but depending on the platform you are watching on, it might still autopay trailers after a movie has finished.
  - onion2k 5y ago
hericium 5y ago
With the removal of account sharing, with recent prices bump, more and more competition getting comfortable on the VOD market, they can't currently go all in at angrying their customers. Rarely but Netflix produces good content sometimes and DRM won't protect it from getting pirated.
WheelsAtLarge 5y ago
What this post misses is that there are a few people that will pay extra not to have commercials. So when Netflix starts to add ads to their offerings, and they will, they will have 2 tiers. A lower cost with commercials and the higher one with no commercials. It's the only way they can increase their earnings growth while keeping the subscription cost relatively low. I predict that with in 2 years we will see a Netflix with commercials.
- WalterBright 5y ago
  They can also switch to "premium" content, which you pay extra for.
- hedora 5y ago
  What sorts of advertisers buy slots that only target consumers with less than a few dollars of disposable income per month? Sadly, Amazon has the right idea here. Prime Video is (effectively) free, and a big chunk of the premium back catalog sits in IMDB TV, where ads are mandatory.
- boffinism 5y ago
  The post doesn't miss that. The post is about that.
- bigiain 5y ago
  > What this post misses is that there are a few people that will pay extra not to have commercials. And there are also people who will go back to using BitTorrent to not have commercials. I wonder how the economics will work out there? I'm currently paying for 4 streaming services because of how they've siloed various shows off. It'd probably only take one of them to start playing shitty broadcast tv style ads during things I'm watching for me to rage quit them all, and go back to downloading everything I watch and using shared Emby servers between a few friends.
  - rosndo 5y ago
    This article does not suggest that Netflix should ever show ads to you, an existing customer. It suggests that Netflix should offer an ad-supported plan for people unwilling to pay current prices.
chupchap 5y ago
Just do live sports already. Netflix has proved that there is a limit that can be hit by chasing long-tail viewership alone. Sports content is extremly fresh and generally exclusive. This could then be re-packaged into 'Drive to survive' type show as well. Amazon already did this partially with 'The Test' in Cricket context.
happybuy 5y ago
Netflix has two key disadvantages when compared to competitors: - A lack of broader ecosystem leverage. Apple (through devices and Apple One), Amazon (through retail delivery with Amazon Prime) and to a lesser extent Disney (via their IP) can leverage these assets to both support streaming growth and not require direct profitability. - A lack of quality. The shovelware of content that Netflix has focused on in the last few years will be their downfall. It makes ideas such as adding advertising palatable – most of the content is crap so why won't they put ads next to it? Apple's best picture win for CODA was an inflection point in the streaming wars. It shatters the illusion that Netflix is the premiere streaming service. Netflix is still the biggest but over time the lack of quality will further tarnish their brand and impact on their ability to raise prices. From a content quality perspective, Netflix with ads will be compared in consumers minds to YouTube. Once this occurs, consumers won't want to pay much more for Netflix than they currently do for YouTube.
- santiagobasulto 5y ago
  As a movie fan, I despise Netflix's creative line. Their model is to create dumb TV Shows repeating the same concepts over +8 seasons with no real inherent concept. People just get engaged because it's what's closest and easiest to watch. Now, said that, The Power of the Dog and Rome were two very good movies that somehow came out of Netflix. I don't think that CODA is such a turning point. All these services are pouring so much money into productions that sometimes they hit the bullseye.
yessirwhatever 5y ago
I read this and I’m honestly still not sure what Ben’s point is. Needlessly long article that goes through so many irrelevant aspects. Not to mention the clickbait title.
- doldisod 5y ago
  > I read this and I’m honestly still not sure what Ben’s point is It’s in the title > Not to mention the clickbait title. Why do you think the title is clickbait? It accurately reflects the contents of the article.
  - yessirwhatever 5y ago
    So what you're saying is that the point of the article is in the title, and the title is not click bait because the point is reflected in the content? Sounds like circular logic.
noio 5y ago
The fact that subscriber growth slowdown is a reason for panic, is the reason that so many cool products and startups get worse over time. Why not take the revenue they have and provide a good, sustainable service for that income? Why does it always have to be growth or bust?
- c0nducktr 5y ago
  I wonder that so often, and the answer I find myself landing on is... greed. It's greed. Investors want to make more money, they don't care about the product, or the experience in using the product. They just want more money. That's how the whole system is set up. It's sadly just how it is.
  - EnKopVand 5y ago
    I think it’s a little unfair to call it greed because of how the world operates. Dumped down a little the path for a successful company in the west is to have founders create a small company with a great culture that cultivates growth through a great product. Eventually bigger capital notices the rapid growth and invests, typically letting current and coming employees buy options at the same rate they do because they want to keep the culture until the IPO. Eventually the company has grown enough that it is now a large or even enterprise company while skipping all the steps in between because of the rapid growth, and with all the challenges that come with the that, and then the IPO launches. Talented capital will launch lower than they could, so that they can IPO at 100 and then truly sell out at 400-500 (made up numbers to give you the idea) a couple of years later where the company becomes a truly public company. During those years the founders and much of the talent are very likely to leave the company. Partly because working for an enterprise wasn’t what they signed up for, but mainly because the rapid growth has likely stagnated, which means that you can get so much more out of your time building something new. Your time is limited and how you get to spend it is directly tied to your wealth. Why would you waste either on something that doesn’t grow when you could be growing your wealth 40% a month on something else? Maybe it’s greed, but it’s also how you play our system. The only weird part about it all is why we aren’t teaching children financial impact and how to maximise it in schools. I mean, I had no idea how rigged the world is until we had our first million (in Danish KR, so around $150k). Simply being able of putting down 30% on the loan for our house ourselves means that we have around 10k DKK ($1500) more to ourselves, every month, compared our friends who are similar places in life minus the start capital and thus are paying those $1500 directly into the banks pockets.
0des 5y ago
Mmmm a little embrace extend extinguish of the cable world, what a new concept Netflix stomped the breath out of cable and then became the thing it sought to replace
anothernewdude 5y ago
I would drop that subscription so fast.
mr_toad 5y ago
I can cancel my sub in less time than it takes to watch an add.
dschuetz 5y ago
First the streaming vendors compete for users, then, as the market is getting saturated (no more users left for subscriptions), they start competing for ads. And then users start cancelling, because of too many or irrelevant ads. It's a vicious cycle, the never-ending story of how the ads industry poisons other markets.
- hulitu 5y ago
  There are users. The issue is the service. In DE there are almost no politically incorrect movies on Netflix. The quality of video is bad ( with HD and good internet connection), STNG not available STDS9 available in MPEG1 quality ( though MPEG 1 is sharper) and the sound is just terrible. Why pay for something like this ? And now ads ? So they want more money but the only evolution of the service is from crap to crappier ?
  - jeroenhd 5y ago
    The quality issue you describe is often because there's simply no higher quality available. Even on DVDs you'll find similar quality video. Availability issues are often because companies have paid big bucks for long term distribution rights within a geographical area. In this specific instance it could also be Paramount screwing you over like Disney did when they launched their own competitor. Years ago, my Netflix subscription drastically reduced the amount of shows I pirated. As the streaming industry started to develop and more and more studios pull their content or try to get people to pay for their own special Netflix, I'm finding myself using Sonarr more and more. Like Steam and Spotify, Netflix solved the accessibility and availability problem. Now the media industry is trying its hardest to undo that and make steaming unnecessarily burdensome again. Their short term profits are ruining their business model once again and when this system eventually collapses, the media companies will complain about piracy once again.
    - kuschku 5y ago
      > The quality issue you describe is often because there's simply no higher quality available Netflix in Germany sends audio in 64 or 96kbps for stereo and 192kbps for 5.1 Video quality is just as bad.
LordHeini 5y ago
Would it really be a benefit tough? I would say no because: Having all your costumers pay a monthly fixed price is the most comfortable and reliable way to earn money. Adds revenue is based on how many people see it, which is not known if have bunch of them in front of a TV, depends on the day of time, what is shown and so on... Adds dictate what you can do. Ever heard a YouTuber say "I can't show or say this or I get demonitized"? That would happen to Netflix too. And Netflix is an international company, showing nudity in German is not a problem. Showing violence in America is no problem but cater to both and try to sell Adds for that is going to be a mess. So it would completely destroy what Netflix is content wise, and thus lose a lot of customers. Generic bland drizzle TV that sells you Soap and other crap like cable TV? No thanks And it is questionable if it increases revenue at all. Streaming costs money. I have a Netflix account which I seldomly use. If I where to watch add based Netflix they would earn way less from me. Maybe that is the case for the average user as well. The author does not know but the people at Netflix probably do.
OtomotO 5y ago
The only thing that grows without limits in nature is a malign tumor and that usually kills the host. Yet for some reason regarding business and economy unlimited growth is the holy grail. Regarding the topic: Sure, do it... I'll gladly move on to some other service. I may be one of the few people actually doing this, but worry not, I don't care for what others do with regards to my decisions. Apart from that there is more and more content on Netflix I am not even slightly interested, all that reality show bullshit that creeps in... brrrr
cameronhowe 5y ago
Netflix shows are already filled with ads. I don't understand all these people who think they have an ad free experience watching on netflix.
- gambiting 5y ago
  I think there is a certain difference between the show pausing for 5 minutes to show me an ad of a brand new Jeep, that has absolutely nothing to do with the show I was watching, and the character in the show using a brand new Jeep with the logo prominently visible. The first one gets in the way of me enjoying the show, the second one does not.
  - cameronhowe 5y ago
    The comparison between a long ad break and a single minor product placement isn't a fair, I've never seen a single 5 minute ad for a car on TV. But I guess it does answer the question of how some people think.
    - gambiting 5y ago
      Ok, then pausing the show for a 30 second ad is equally unacceptable to me - is that better?
    - brazzledazzle 5y ago
      It was obviously hyperbolic.
nly 5y ago
An ad subsidized pricing level would be OK, but if you think I'm paying $21/mo and watching ads, you won't see me for dust. The lack of ads is the #2 USP after good content
dingleberry 5y ago
maybe netflix should package internet fiber optic to ensure quality and exclusivity
peter-m80 5y ago
If netflix puts ads on my subscription, I would shut it down and go back to bittorrent
Traster 5y ago
At the end of the day, after the "Tech disruption" stage of online streaming I think we're going to eventually move back to a point where the focus of the tv industry is back to extracting value. That's what drove the cable TV bundles, and that's what will happen with Streaming once the dominant players are stable. Netflix is reaching the point of stability, some others haven't yet - and those that haven't will either stabilize or go out of business and get bought up by their competitors. The key there is market segmentation. So yes, there will be a thousand different ways including Ads to extract the maximum cash out of every individual customer. That'll be Ads, it'll be paid early releases, it'll be extra subscriptions for Sports and live events, it'll be geo-gating content. It's not complicated, cable TV has been doing it for decades. Once Netflix subscriber count cools, that'll be the only direction left to head, and it'll be really obvious what to do because they know what Cable TV has been doing for decades. Oh and you don't need to pay silicon valley software engineer prices to do any of that.
giords 5y ago
I like how capitalism can boost innovative ideas but I also hate how it's eager to burst them into flames just to jump on the next thing to make more money. Almost every service I know quickly moves from the "it's cool" phase to the "get this other feature you don't need" phase just to get a 0.6% extra of growth. So many great services are now packed with ads and useless features that just make the experience worse and filled with annoying bells and whistles. YouTube and Reddit are just two examples, they're increasingly more annoying to use and if there were decent alternatives in terms of content I'd jump to them in a blink. Instead, for now, I just pretty much stopped using Reddit and go to YouTube only when I truly need, for how much I despise the quantity of ads and smoke they throw at you.
Shadonototra 5y ago
- bad UI/UX - bad performance (wich indicates poor tech) - bad "netflix" productions - price increase - competition growing - lack of reactivity the only thing i remember from netflix is their intro video, and the countless of netflix flops (cowboy bebop for example)
littlecranky67 5y ago
The second Netflix introduces Ads, I'll drop my subscription and go back to the Bay + Torrent - I own a VPN already. The issue is, that at this point in time, Netflix will become a greedy data monster like Google and try its best to profile me to "improve my ad experience". Thanks, but no thanks. VLC does not profile me when I watch a pirated show.
- erazor42 5y ago
  Same, I like their service but I'd instant drop. Have you try watching TV those days ?
- deleted 5y ago
  [deleted]
mdoms 5y ago
This guy honestly writes the absolute dumbest stuff on the internet (perhaps second only to PG) but because he does it in a very verbose way HN eats it right up.
nowherebeen 5y ago
I can't think of a faster way to make people unsubscribe. If they are already paying for it and you expect them to watch ads, you must be out of your mind. The ad model only works when the product is free. It's a binary choice.
usrusr 5y ago
No, Netflix should not sell ads. What they should do is start syndicating some of their content on lower tier platforms. Those platforms that might very well be ad-based, perhaps even run by Netflix, off-brand if they don't find any takers. Modeled after the old trickle-down from cinema to video to broadcast. This wouldn't just be another income stream, it would also be an ad for "real" Netflix.
mschuster91 5y ago
No. Just fuck no. Netflix is about the only media one can enjoy without being bombarded with advertising to sell me products I don't have the money (cars) or any need for. The sad reality however is that an user-friendly, ad and spyware-free experience will never get the amount of investor money that the hypergrowth-driven startups get in the hope of establishing dominance followed by rent-seeking.
aaronharnly 5y ago
The Balkanization of streaming services has me ready to try Netflix DVD again. Anyone out there still subscribing? How is it?
manholio 5y ago
The author seems oblivious to the fact that Netflix's main competition are not other streaming or entertainment companies, but filesharing and unauthorized streaming. Netflix won that competition by providing a simple, quality product, at a price point that, for most people, makes torrenting no longer appealing. The moment they try to push unskippable ads down the throat of those consumers is the exact point where a large bulk of them will reassess if spending 5 minutes to hunt down torrents and watch them uninterrupted is a better deal than paying for a service that stops your movie for 5 minutes to show ads. Sure, they could go for short unintrusive ads before the show starts. But you can't generate significant revenue with that, otherwise every TV station would do it and streaming and pay-per-view would not exist.
- unfocussed_mike 5y ago
  > The author seems oblivious to the fact that Netflix's main competition are not other streaming or entertainment companies, but filesharing and unauthorized streaming. This isn't really true. Netflix's biggest worry is Disney+, I'd have thought -- the streaming company which simultaneously has exclusivity over very nearly a controlling share of US-centric cinema/TV content and is the last to market with the most growth potential. Netflix's second biggest worry is Amazon Video, which is gobbling up studios and franchises all over the place but is at least at this point just a component part of the nearest thing to a universal service provider that the world has seen since the fall of Soviet communism.
deleted 5y ago
[deleted]
ki_ 5y ago
back to torrents? i mean.. that's what people are going to do. The only thing you have to do to defeat torrenting, is offer a better service. It's not rocket science. Putting ads in your streaming service is like the opposite of that.
pr07ecH70r 5y ago
Netflix's content deteriorated the last one year (at least here in Switzerland). Once there is a good show and I finish it, I have to search for new one increasingly longer. They increased the prices (again). Now putting adds, for increasingly more expensive and less quality service will be the final nail.
throwawayffffas 5y ago
I think ads would kill Netflix, if it has ads it's not better than youtube or tv catch-up. Honestly what I think they should do is add micro-transactions. Introduce netflix points, which can be used to do things like skip the wait on shows released weekly. Watch new netflix movies ahead of the rest of the subscribers, etc. The marketing challenge would be to pass it of as getting perks instead of penalizing the rest of the subscribers, the easiest way to do that would be to include a small number of netflix points in the standard subscriptions. It could work like you can watch up to episode 5 this week and wait one week for episode 6 or pay 1 netflix point per episode to watch the rest now. You can buy 1 netflix point for 1 dollar and everybody gets one every month as part of their subscription.
- dwighttk 5y ago
  …Make people watch shows they think should be doing better (but no one seems to watch them) to get points. Thanks I hate it.
- throwawayffffas 5y ago
  They could also work as votes, as in please don't cancel this show I love that no one else watches.
AzzieElbab 5y ago
I will cancel my Netflix subscription immediately after seeing first commercial. I can tolerate ads on prime because I get prime video as a bundle and because they only advertise their own content but Netflix is a different story. Selling ads is slippery slop, it ruins core product. Just look at TV programming or latest google search results
- throwawayffffas 5y ago
  Indeed the fact that prime only advertises other shows on prime is really the only reason I tolerate their ads.
- ycombinete 5y ago
  Adverts are slippery slop indeed.
- rosndo 5y ago
  Did you read the article or just the headline? It doesn’t suggest that Netflix should show you ads.
spzb 5y ago
Now TV, a popular UK-specific OTT TV provider, has recently introduced ads. They're really annoying but of course you can opt out as part of their £5 a month premium surcharge (also slightly upgrades your picture resolution and adds surround sound). It's basically just a way of creaming off some extra cash from your more affluent subscribers while keeping the low price of entry. Very similar to airlines and train companies upselling "premium economy" seats which are basically the same as plain old economy about ten years ago.
throwawayffffas 5y ago
I have been increasingly disgruntled by netflix lately. - The app on my laptop will stop working when I move it to my big screen over miracast. - The content here(UK) seems very limited, I feel I have watched everything watchable. - The video quality in the browser is shit. - It feels like the UI is fighting against me when I am trying to find content to watch (this might be because there is not a lot of content). If they add ads I will just drop them on the spot.
ThinkBeat 5y ago
The second Netflix introduces ads I would drop my subscription and never go back. If Netflix at the same time increased the cost of a "non adverstiment" product that is just adding insult to injury. I have structured my media consumption such that I rarely see any ads, and never any tv-ads. If find them painful to watch in a real sense of the words. That means I have dropped a lot of services/products/venues/channels but I have never missed them and certainly not to a degree that would entice me to return. When I visit someone who has the telly on and it runs in the background I have to grind my teeth and try to find some solution to turning it off. A dentist I no longer see did an "upgrade" of the office and got TVs mounted in the ceiling and headphones. As the doctor was drilling away having fun, I was supposed to relax, watch tv and have fun. The drilling was less painful and annoying than having to watch ads every 5 minutes. Closing my eyes was a good option but still the headphones. My new dentist has logic and math puzzles that he or someone he knows has hand drawn artistically on a big sheet of cardboard that he then attatchs to the ceiling. This is so much better in every way. It is also a lot cheaper and better for nature. I have asked him about tvs and thankfully he has no intention of buying any. He changes them out once a month I think
- jefftk 5y ago
  The article is proposing offering a two tiers, one with ads and one without, which is what most of Netflix's competitors do. That would allow you and others who feel similarly to continue watching ad-free.
  - peoplefromibiza 5y ago
    > That would allow ̶𝗒̶𝗈̶𝗎̶ ̶𝖺̶𝗇̶𝖽̶ ̶𝗈̶𝗍̶𝗁̶𝖾̶𝗋̶𝗌̶ ̶𝗐̶𝗁̶𝗈̶ ̶𝖿̶𝖾̶𝖾̶𝗅̶ ̶𝗌̶𝗂̶𝗆̶𝗂̶𝗅̶𝖺̶𝗋̶𝗅̶𝗒̶ ̶𝗍̶𝗈̶ ̶𝖼̶𝗈̶𝗇̶𝗍̶𝗂̶𝗇̶𝗎̶𝖾̶ ̶𝗐̶𝖺̶𝗍̶𝖼̶𝗁̶𝗂̶𝗇̶𝗀̶ ̶𝖺̶𝖽̶-̶𝖿̶𝗋̶𝖾̶𝖾̶.̶ ̶ Netflix to make more money out of nothing.
  - rglullis 5y ago
    Imagine if we had a company that managed to produce its products with minimal waste and had an efficient recycling program. It would be a little bit more expensive to run because it was paying for the externalities, but the profit margins were high enough that a business could still be had without destroying itself. Now, a bunch of competitors show up and they just don't care about the environment. They dump all the waste on their neighbors. Their products cost a less than the main company, but they give you a "green option" where you can pay a bit more to offset (some) of the externalities. What you are proposing is that the company goes down in their principles to compete with their toxic competitors. For what?
codingdave 5y ago
> differentiation is no longer based on the user experience, but rather uniqueness I heartily disagree. Ads are a reason to cancel, so that entire point can be put to the side. While the user experience is vastly different between streaming services. Also, the uniqueness of content is a double-edged sword. Netflix has focused on content that pushes boundaries, which is great for some people, but not all. But I digress. The point I was heading towards is that UX is the weak link in stream right now. Good points of a streaming UX are/would be: - Being able to restart a show exactly where you left off, and easily find it. - Navigation being as easy on a roku remote as it is with a mouse and keyboard, including searching. - Reliable buffering and streaming. - Closed Captioning, especially if you can configure font size and placement. - Ease of navigation of all the content. - Good recommendations of what you would actually watch, not what they are pimping that month. - Accurate representations of what is new and popular. I'm sure the list could go on. But no service has nailed the experience yet. They each have their strengths and weaknesses. It is time for streaming to mature - to figure out how to make the experience as good as it can be, step up, and take a leadership position based on just how awesome it is to work with the product.
nfRfqX5n 5y ago
netflix could add a "live" channel that is similar to a twitch channel
martin_drapeau 5y ago
I love Netflix for the instant content and no ads. The fact I can binge watch and not have to wait every week for an episode I love. I pay Netflix not to wait and not to be distracted by unsolicited content (i.e. ads or previews of other shows when I start an episode). Youtube ads drive me nuts. I refuse to pay for a subscription for user generated content. A real paradox here. I am ok with it remaining as is. Just don't bring ads to Netflix! I am happy to pay the subscription. Netflix exploring games and other types of content delivery is a smart move. Going from offering passive content to interactive content is not easy though. Wonder where that will lead...
davidgrenier 5y ago
I think they should enter the gaming market. Perhaps put some pressure on Steam who has just refused to refund a terrible game that I have played for 3 hours.
jefftk 5y ago
The main reaction here seems to be "if Netflix starts showing me ads I'm going to cancel immediately", and Netflix should definitely not do that. Ben's proposal is that Netflix add an ad-supported tier, to expand to people who currently don't subscribe because it's too expensive. This is how Hulu, YouTube, Paramount, etc. already work: you can subscribe with or without ads, priced accordingly.
yalogin 5y ago
This is something I have been thinking about too; the question what’s next for Netflix. They feel done, now they are a phase where they just churn out new content and hope to retain the customer base. Netflix feels like it became more of a media company and less tech at this point. Whether they now have a lower priced tier with ads or not is kind of pointless. Sure they will make more money in the short term but they will inevitably reach the same position after they exhaust that customer base too. They are now a big stable business and they have to come to terms with it.
bsenftner 5y ago
I am actually quite surprised Netflix is not heavily into product placements. They have globally popular shows, if nothing else get a soda sponsorship show the Coke/Pepsi cans are the local labeling for every country a show streams. It is not as if such object replacements cannot be 95% automated now. Seriously. Why subject people to the piss poor overt manipulation of advertising when the service's own programming can embed sponsorship transparently into their shows?
LeanderK 5y ago
Netflix now has competitors. I really dislike ads and I think it will worsen the experience so significantly that I'll just switch. Even those small in-house ads for amazon prime are annoying, I can't imagine what real tv-style ads will do.
dhruvarora013 5y ago
I'm a big fan of Stratechery and the original thought behind most of the posts but I think this one completely misses the mark. Advertising is not a new model in the streaming space - Hulu has done it for years and is one of the things I hate most about it. As most people have said here int he comments - if Netflix adds advertising there would be an uproar. Here are some ways I think Netflix could make money just off the top of my head, * Netflix Live - Amazon does this to an extent and there's clearly a demand for live content. This could be sports, or a Twitch competitor or something original (reality tv meets live maybe). * Pay for different regional content - Every VPN advertises the ability to switch countries to watch Netflix from a different country. I would happily pay more if I got access to the US content in addition to the UK. This is a legal problem more than an engineering problem though. * Netflix Infra - every company out there seems to be creating a streaming service and frankly most of them are rubbish - they constantly buffer, have terrible apps and casting functionality. Netflix could create a product similar to AWS and rent out their infra. Yes it does cannibalize their own offering/product strengths but thats happening anyway as their competitors get their shit together * Merchandising - there are a lot of crazy viral hits that Netflix seems to create - Squid Game was one of the most popular Halloween costumes last year. I should be able to order merch right from the app especially for Netflix originals. You only have to look at Disney to see the possibilities here.
kkirsche 5y ago
If they bring ads to the platform I will never again subscribe and I will say if anyone in my family wants it they can purchase it but I won’t support it. I’m sick of being nickel and fined by every company for every ounce of revenue.
sudden_dystopia 5y ago
Eww no. So that they can end up a cess pool like Facebook, google, twitter, etc? What would be super refreshing would be a tech company that stays private and focuses on a useful product instead of growth hacking.
Overtonwindow 5y ago
I don’t watch advertisements. I avoid them and block them online, I mute them when I have to see them on television, or YouTube. I do not want to see ads and I will do all I can to avoid them. That means canceling my Netflix subscription in a heartbeat.
deleted 5y ago
[deleted]
aSithLord 5y ago
I had a free year subsciption to Paramount+ from my cel provider. I canceled it on day 1 because it had ads. I would do the same to Netflix, even if the service was free.
colburnmh 5y ago
Ads were identified as a way to pay for free broadcast of TV or the reduce the cost of subscriptions for users. If I'm paying a subscription fee for streaming, I expect that part of the service I'm buy is the ability to enjoy my content free of distraction from ads. There are two main reasons for this: 1. They waste my time 2. It encourages the further invasionsions of technology tracking The first one should be relatively self evident. The second is more isideous, and one that I'm more concerned about in the long term. Streaming services selling adds will mean the creation of technology to further push tracking of whomever is view the content into the devices that they stream from: computers, tablets, phones, and TVs. When I'm watching a show after a long day at work, I don't want to have to worry about whether my TV is tracking what I watch, etc. This technology is already being developed by smart tv manufacturers, for example, and already exists for the computer devices. And while ad brokers and clearinghouses definitely want tracking technology in every aspect of our lives, I'm getting fatigued by it all and want some portions of my life safe from the collection and sale of that information. If I'm the product that these companies are selling, and the shows I'm watching are the "bait" to get me to agree with that (this is what print media became), then don't charge me, and tell me that.
formvoltron 5y ago
No they shouldn't sell ads, imo. Instead they should open their platform to third party content, give those publishers a share of subscription revenues, and allow capitalism to work its magic.
emrah 5y ago
Subscription + ads is basically the cable model. It's a slippery slope to how things are today.. plus once ads are in the mix, there is more competition. The only thing that makes awful shows bearable on netflix is that there are no ads
Eddy_Viscosity2 5y ago
"the fact that advertising is a great opportunity that aligns with Netflix’s business" Except that it doesn't. Netflix's business model is providing people with ad-free content. This is just another example of the truism that there isn't anything in the world that an MBA can't make worse.
stillbourne 5y ago
The moment netflix starts selling ads I go back to hoisting the jolly roger.
slategruen 5y ago
The algorithm which encourage subscribers binge watch shows really ended up hurting the product. The problem isn't just market saturation; we also run out of content that's going to be entertaining for users. This is basically the law of diminishing marginal utility. Netflix's shouldn't have copied YouTube in this case. A kind of system where users felt in control when to stop watching should've been put into place.

96 points by jger15 5y ago

Netflix already has ads. They just don't look like normal ads because they are product placement in Netflix created content. Which I don't mind as long as it doesn't turn the show or movie into a long commercial.

Lurkynerd 5y ago

We're coming full circle again. Netflix was the reason to stop pirating content, and now Netflix is the reason to return to piracy. And to reiterate what many have already said, this perpetual growth and scale mentality is so so toxic.

Finnucane 5y ago

I still subscribe to the DVD by mail service. If Netflix had ads in streaming content, we'd use that more.

scotuswroteus 5y ago

Why Stratechery aspires to be an industry rag but the guy can't write well (2239 of 2239)

masterof0 5y ago
Because asking a company to put ads on a product their already charge for, is such a sophisticated and unique take, dunno how this guy doesn't have a Pulitzer already. I don't think 3 dollars less of a monthly subscription justifies a truckload of shitty ads. Disgraceful.

sys_64738 5y ago

I don't pay for ads, I pay for streaming.

hoseja 5y ago

This, right here, is a piece of pure crystalline corrosive evil.

version_five 5y ago

They may be able to make more money this way. To me this is akin to explain why we should be strip mining or clear cutting more. It works from a scorched earth capitalism perspective, but doesn't leave is in a good place

PaulHoule 5y ago
Subscribers are more valuable people to market to than non-subscribers because they've already qualified themselves by proving they'll spend money for something.
- AnIdiotOnTheNet 5y ago
  A big part of that something is not wanting any goddamned ads though.
  - robbedpeter 5y ago
    Ads are by their very nature derogatory to anywhere they are placed. Ads never add value to any experience. They always take time and attention from the viewer's intended activity. Not all product information is advertisement.
    - cupofpython 5y ago
      Netflix could have gotten away with ads a few years ago maybe. Not now with all the competition available. their content is relatively weak tbh now that a lot of the classics have moved to other platforms. I'd be gone immediately
      - horsawlarway 5y ago
        I don't think they could have, even then. Competition was incredibly fierce, it just came from cable TV. The main subscriber base for Netflix was essentially folks who didn't want to see ads, and were willing to ditch cable tv for that experience.

KerryJones 5y ago

This changes the brand of Netflix considerably. While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads. I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company.

aidenn0 5y ago
It is also non-trivial to implement in a way that supports older devices; I can't watch ad-supported prime video channels on my BluRay player, which is rather annoying.
giobox 5y ago
> While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads In credit to YouTube and Hulu, they give you the option to go ad free, or in the case of YouTube pay nothing at all. Have cheap price and ads, or pay a little more and get the ad free experience. I happily enjoy ad-free Netflix, YouTube and Hulu. > I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company. If you have read the article and try to respond to the authors points more directly, he is making a pretty compelling case as to why this is not short term thinking at all - subscriber growth is effectively over for the company now in the near term, there are little new customer households left to sell a subscription to for Netflix, which is of course why we are seeing more frequent subscription price rises too. On the contrary, he is laying out a long term strategy that may still deliver growth, something subscriptions increasingly won't as subscriber growth continues to inevitably fall. As YouTube and Hulu both prove, one can have ad-supported and ad-free subscription tiers on the same service, and I suspect is likely the path Netflix would follow if they pursue such a plan in future. While as an individual you may not like ads (thats fine!), the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business, which so far has been price rises...
- 5y ago

akagusu 5y ago

Will it be free if it sells ads or will people pay for the privilege of watch ads?

mrlonglong 5y ago

Do that and I will end my Netflix subscription.

medler 5y ago
The article describes a multiple-tier model, where people like you can pay for an ad-free experience, while more price-sensitive consumers can get a cheaper subscription supported by ads.
- c0nducktr 5y ago
  - stavros 5y ago
    Then they can get the cheaper/free tier, with ads. Is that not better?
boffinism 5y ago
As a subscriber you wouldn't see the ads, though.

axg11 5y ago

There's a wider dilemma at play for Netflix. As the article points out, they've reached a point where their main product (paid streaming) has saturated the market. They won and there's not much more to be gained there. Options for their next move essentially boil down to: (a) expand into "other bets" (e.g. games) (b) compromise on the quality of their product and brand by selling ads to gain incremental revenue (c) give up on growth and be happy with a large, sustainable business They are openly pursuing (a), which is the ideal outcome. Ideally they can even launch gaming or some other form of entertainment as a separate subscription, helping to diversify their revenue. I see (b) as the backup plan. If they're not able to diversify into another revenue source, their next best bet is to compromise their existing product and extract the final bit of juice using advertising. Some number of customers will drop down from paid to free, and that number is difficult to model. Netflix could also end up shooting themselves in the foot by introducing ads, if that convinces the whole industry to do the same. In the long run that will reduce margins for all. Finally, (c) isn't compatible with the type of capitalist society we live in. Sometimes a company has peaked and that's OK.

michaelbuckbee 5y ago
Beyond pursuing, right now, if you log into the Netflix app on your iPhone they have a Gamepass/Apple Arcade style set of game that you receive alongside your subscription.
- orhmeh09 5y ago
  Indeed, I played a round of a game made by Trivia Crack last night. It was my first time and I think it’s a new addition? Just popped up on my Home Screen yesterday.

zck 5y ago

I think people are missing the suggestion of this article. It's not suggesting that Netflix adds advertising to the existing subscriptions; it's suggesting they add a lower-priced subscription supported by ads. >...it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers). If they kept the existing $10/$15.50/$20 plans the same (https://help.netflix.com/en/node/24926 https://help.netflix.com/en/node/24926), but they add a $5 ad-supported subscription, that's not changing anyone's experience, unless they choose to switch.

buffington 5y ago
Everyone's experience changes when a company begins to consider ad revenue. How those changes shake out is hard to predict. It's not a stretch to suggest that even little things change for everyone though. Adding ad revenue changes how a company thinks about nearly everything, whether they're aware of it or not, and ultimately the end user suffers. For example, Netflix would likely start trying to tweak content discovery in a way that benefits advertisers. Rather than show me content that matches my historical interests, they show me content that optimizes ad revenue as well. It's unlikely they'd maintain two different "ad-free" and "ad-full" recommendation algorithms. Motivated by pressure from advertisers, Netflix might be less inclined to produce or provide content that made advertisers uncomfortable or benefitted an advertiser's competitors. When producing content, they now have two bosses: subscribers, and advertisers. Both have entirely different expectations. Those expectations push Netflix into making compromises, and rarely do those compromises produce outcomes that are better than if they only focused on making one side happy.
- zck 5y ago
  This is a fair critique! It's just more nuanced than "I don't want to watch shows with ads".
  - formerkrogeremp 5y ago
    And we'll being going to piracy if we had to watch ads on top of paying a monthly fee. This would be ridiculous. There's advertising almost everywhere else. Why do we need more advertising?

Ancalagon 5y ago

As other commenters out this seems like horribly short term thinking. The reason I subscribe to Netflix and Amazon prime and NOT to Hulu or YT is because Hulu has ads (prime has internal ads I suppose, but I’ve always been able to skip those unlike YouTube). I understand content generation is expensive. Maybe Netflix needs to expand more on the IPs they currently own? Merchandising and such (how about a LEGO/Stranger Things crossover anyone?) Differential pricing models for other countries would make sense too. I’m sure the board has thought of all of these and none are particularly easy, but putting ads where they don’t belong would ruin their brand.

michaelbuckbee 5y ago
Both Hulu and YT have premium (mostly) ad-free experiences. I say mostly as the line gets a little blurry with cross promotion of other shows on the same service.
- Ancalagon 5y ago
  Yeah and I think this blurred line of ads vs no ads damaged their brands at the onset as now I associate them with old school cable tv, which is what I was trying to escape.

buffington 5y ago

If Netflix introduced ads I'd cancel immediately, even if my paid plan didn't show me those ads.

_8j50 5y ago

You know how there are so many nice posts that make you go "I would want to buy this person coffee/beer if I could.", I feel the exact opposite towards this person. People like this are why shitty services like Hulu exist and why cable TV charges you $200 and is 70% (at least) ads! I will pay netflix more than any cable company because the quality of their content. Exploitative capitalism at its finest. Shortsighted greed with no room for imagination. I can spend 15 min and come up with at least 5 ways to charge customers more without needing to sell them ads. I don't care if it costs $0.99 I will cancel if they have even one ad and I will pay up to $2-300 for no ads (including for other users because it creates a perverse incentive to collect user data and sell anyways). You want cheaper with ads? There is a myriad of services that provide that (although the cheap part is rare!)

deleted 5y ago
[deleted]
rosndo 5y ago
> including for other users because it creates a perverse incentive to collect user data and sell anyways Huh? I don’t see Facebook or Google going around selling user data, it’s secret sauce they want to protect. Why would netflix sell user data if they start advertising? Wouldn’t that be more likely in a world where user data isn’t otherwise a major revenue source for them? (Although collecting user data is clearly already super important for netflix as they use it to design their content)
- _8j50 5y ago
  Because to netflix it is supplemental income, to fb and google it is their main income. Google and fb run their own ad network as well. Why would netflix not sell your interests in movies and habits to allow better targeting in their platform? If you get a no ad experience, why waste the opportunity? Sell it to others so they can target you elsewhere. That is, if they go down the ad road.
  - rosndo 5y ago
    > Why would netflix not sell your interests in movies and habits to allow better targeting in their platform? Why would they need to sell that data to allow better targeting? Doesn’t make sense. > That is, if they go down the ad road. Why would adding ads to Netflix force them to do these things that they would already be perfectly capable of doing? Netflix collects tons of data, could sell it if they wanted.

horsawlarway 5y ago

I don't normally mind stratechery, but I think this one is a complete miss.

vanilla_nut 5y ago
I mean, he's... technically right? Netflix could start showing ads, and increase revenue (either from creating a lower price tier that encourages more adoption, or by adding ads to the lowest price tier to increase revenue). Of course, that's also the same logic that hundreds of tech companies have already "figured out" about ads. And it always ignores the knock-on effects of ads seeping into other price tiers, of ads taking priority over other features, etc. etc... that eventually destroy entire platforms and pieces of software.
- err4nt 5y ago
  It won't increase revenue if a large chunk of the currently subscribed-for-life people bail, it'll be eternally forfeited profits. Just as a thought experiment - how many people currently subscribed would be subscribed for 30+ more years if they could just maintain what they have been doing for 30 years? The potential lifetime revenue is so huge it is a shame any time they do something that makes a lifetime subscriber bail on 30+ years of subscription payments without a second thought. It's like they have the fish on the hook and they're debating if they can catch more fish by cutting the ones they have loose.

dddnzzz334 5y ago

I am just gonna stick to Piracy. I will continue get superior service while legit payers will continue to suffer.

chrismeller 5y ago

“This post contains product placement”

nickduggets 5y ago
Now I'm scared of two things. 1) Netflix will start using product-placement in their original shows to boost revenue. 2) They're already doing this and I just haven't noticed.

bfrog 5y ago

The day Netflix has ads is the day I cancel

vonwoodson 5y ago

Boo that man! Booo!!! Booooo!!!

_tom_ 5y ago

Classic clickbait. Post a terrible idea, that gets people angry, and they click through. Ignore this and don't click.

pankajdoharey 5y ago
If Netflix starts selling ads then only Netflix executives will watch the shows, everyone else will cancel their subscriptions.
- deleted 5y ago
  [deleted]
- MisterBastahrd 5y ago
  Yeah, the quality of a lot of Netflix shows just feels inferior to other platforms.
- bigiain 5y ago
  I'm happy to go back to using BitTorrent for everything if they insist on making the experience of paying for shows worse than pirating them.
- ComradePhil 5y ago
  You say that but people have been watching cable TV for decades.
  - Twisell 5y ago
    Maybe the key point being that they are a different audience, Netflix users seek something else. Copy cable TV business plan and theses users will just migrate elsewhere. Way to shot on your own foot.
  - lnxg33k1 5y ago
    Speaking of cable, if the quality of Netflix produced content would be comparable to the one of hbo or Disney I would even consider paying for it and watch ads. But I think Netflix subscriptions are going down because m, at least in my personal experience, the content is just offensively stupid, banal, childish and poor. Maybe the first step should be to product stuff that makes sense

chadlavi 5y ago

Not today satan.

imgabe 5y ago

You know what doesn't have ads? Pirated content.

charcircuit 5y ago
To be fair there are plenty of piracy sites that do include ads on the web page.
- shmde 5y ago
  HN crowd uses Ad-blocker.
littlecranky67 5y ago
Unfortunately, even this changes. Lots of uploaders add subtitles, that pop up 2-3 times during a show "To download more movies, visist our site XXXX".
- shmde 5y ago
  Did you just compare a Video Advertisement which takes over the whole screen to a 2-3 second Subtitle Ad which happens at the end of the movie ?
  - littlecranky67 5y ago
    Well, it all starts somewhere. I am old enough to remember when private TV started in Germany in the 80s/90s - a 90 minute movie had exactly one ad break of 2-3 minutes. From there it "evolved" into 3-4 ad breaks, overlay ads mid-show, plus HbbTV overlay. Same holds true for the Internet. In the 90s, there were 1-2 banners (animated GIFs), tops. It also evolved into intrusive tracking ads with flashy videos, sound etc. My thesis is: Because you always get used to the ads and start to sub-concisely ignore them, they get more and more obtrusive to counter that effect. Its a race to the bottom, and my observations that I described above back this thesis.

GoodJokes 5y ago

fomine3 5y ago

Comments looks like the HN bubble. I think OP is reasonable for strategy, regardless of ads hate.

onion2k 5y ago

I agree. Netflix should sell ads. But... They should play them after you've watch an episode of something, and the "Play next episode" button should immediately skip the ad. The ad volume should be normalized to the same as the episode (or lower), and the ads should have to match the same production specifications as Netflix shows. They should be like small, very short, unobtrusive films that advertise something. So long as I remain in control of what I'm watching, I don't have to watch an ad to access content, the ad is high quality, and the ad comes after the thing I chose, then I'd accept ads on Netflix in the same way I would accept a trailer for a Netflix show. I imagine that bar is probably set too high though.

wodenokoto 5y ago
Some of us would like some silence when a movie or an episode finishes. Currently, the auto playing of trailers is bad enough as it is.
- hericium 5y ago
  You can turn it off somewhere in profile settings on netflix.com
  - burntwater 5y ago
    I've found it to be very inconsistent. I've found that typically episodes will play credits and not auto-forward to the next episode. Movies will sometimes skip credits and move to trailers, sometimes not. I feel like usually they move to trailers. And movies is when I MOST want to watch credits and reflect on the movie, so Netflix is literally doing the opposite of what I want.
  - wodenokoto 5y ago
    Not really. You can turn off auto-skipping to next episode, but depending on the platform you are watching on, it might still autopay trailers after a movie has finished.
- onion2k 5y ago

hericium 5y ago

With the removal of account sharing, with recent prices bump, more and more competition getting comfortable on the VOD market, they can't currently go all in at angrying their customers. Rarely but Netflix produces good content sometimes and DRM won't protect it from getting pirated.

WheelsAtLarge 5y ago

What this post misses is that there are a few people that will pay extra not to have commercials. So when Netflix starts to add ads to their offerings, and they will, they will have 2 tiers. A lower cost with commercials and the higher one with no commercials. It's the only way they can increase their earnings growth while keeping the subscription cost relatively low. I predict that with in 2 years we will see a Netflix with commercials.

WalterBright 5y ago
They can also switch to "premium" content, which you pay extra for.
hedora 5y ago
What sorts of advertisers buy slots that only target consumers with less than a few dollars of disposable income per month? Sadly, Amazon has the right idea here. Prime Video is (effectively) free, and a big chunk of the premium back catalog sits in IMDB TV, where ads are mandatory.
boffinism 5y ago
The post doesn't miss that. The post is about that.
bigiain 5y ago
> What this post misses is that there are a few people that will pay extra not to have commercials. And there are also people who will go back to using BitTorrent to not have commercials. I wonder how the economics will work out there? I'm currently paying for 4 streaming services because of how they've siloed various shows off. It'd probably only take one of them to start playing shitty broadcast tv style ads during things I'm watching for me to rage quit them all, and go back to downloading everything I watch and using shared Emby servers between a few friends.
- rosndo 5y ago
  This article does not suggest that Netflix should ever show ads to you, an existing customer. It suggests that Netflix should offer an ad-supported plan for people unwilling to pay current prices.

chupchap 5y ago

Just do live sports already. Netflix has proved that there is a limit that can be hit by chasing long-tail viewership alone. Sports content is extremly fresh and generally exclusive. This could then be re-packaged into 'Drive to survive' type show as well. Amazon already did this partially with 'The Test' in Cricket context.

happybuy 5y ago

Netflix has two key disadvantages when compared to competitors: - A lack of broader ecosystem leverage. Apple (through devices and Apple One), Amazon (through retail delivery with Amazon Prime) and to a lesser extent Disney (via their IP) can leverage these assets to both support streaming growth and not require direct profitability. - A lack of quality. The shovelware of content that Netflix has focused on in the last few years will be their downfall. It makes ideas such as adding advertising palatable – most of the content is crap so why won't they put ads next to it? Apple's best picture win for CODA was an inflection point in the streaming wars. It shatters the illusion that Netflix is the premiere streaming service. Netflix is still the biggest but over time the lack of quality will further tarnish their brand and impact on their ability to raise prices. From a content quality perspective, Netflix with ads will be compared in consumers minds to YouTube. Once this occurs, consumers won't want to pay much more for Netflix than they currently do for YouTube.

santiagobasulto 5y ago
As a movie fan, I despise Netflix's creative line. Their model is to create dumb TV Shows repeating the same concepts over +8 seasons with no real inherent concept. People just get engaged because it's what's closest and easiest to watch. Now, said that, The Power of the Dog and Rome were two very good movies that somehow came out of Netflix. I don't think that CODA is such a turning point. All these services are pouring so much money into productions that sometimes they hit the bullseye.

yessirwhatever 5y ago

I read this and I’m honestly still not sure what Ben’s point is. Needlessly long article that goes through so many irrelevant aspects. Not to mention the clickbait title.

doldisod 5y ago
> I read this and I’m honestly still not sure what Ben’s point is It’s in the title > Not to mention the clickbait title. Why do you think the title is clickbait? It accurately reflects the contents of the article.
- yessirwhatever 5y ago
  So what you're saying is that the point of the article is in the title, and the title is not click bait because the point is reflected in the content? Sounds like circular logic.

noio 5y ago

The fact that subscriber growth slowdown is a reason for panic, is the reason that so many cool products and startups get worse over time. Why not take the revenue they have and provide a good, sustainable service for that income? Why does it always have to be growth or bust?

c0nducktr 5y ago
I wonder that so often, and the answer I find myself landing on is... greed. It's greed. Investors want to make more money, they don't care about the product, or the experience in using the product. They just want more money. That's how the whole system is set up. It's sadly just how it is.
- EnKopVand 5y ago
  I think it’s a little unfair to call it greed because of how the world operates. Dumped down a little the path for a successful company in the west is to have founders create a small company with a great culture that cultivates growth through a great product. Eventually bigger capital notices the rapid growth and invests, typically letting current and coming employees buy options at the same rate they do because they want to keep the culture until the IPO. Eventually the company has grown enough that it is now a large or even enterprise company while skipping all the steps in between because of the rapid growth, and with all the challenges that come with the that, and then the IPO launches. Talented capital will launch lower than they could, so that they can IPO at 100 and then truly sell out at 400-500 (made up numbers to give you the idea) a couple of years later where the company becomes a truly public company. During those years the founders and much of the talent are very likely to leave the company. Partly because working for an enterprise wasn’t what they signed up for, but mainly because the rapid growth has likely stagnated, which means that you can get so much more out of your time building something new. Your time is limited and how you get to spend it is directly tied to your wealth. Why would you waste either on something that doesn’t grow when you could be growing your wealth 40% a month on something else? Maybe it’s greed, but it’s also how you play our system. The only weird part about it all is why we aren’t teaching children financial impact and how to maximise it in schools. I mean, I had no idea how rigged the world is until we had our first million (in Danish KR, so around $150k). Simply being able of putting down 30% on the loan for our house ourselves means that we have around 10k DKK ($1500) more to ourselves, every month, compared our friends who are similar places in life minus the start capital and thus are paying those $1500 directly into the banks pockets.

0des 5y ago

Mmmm a little embrace extend extinguish of the cable world, what a new concept Netflix stomped the breath out of cable and then became the thing it sought to replace

anothernewdude 5y ago

I would drop that subscription so fast.

mr_toad 5y ago

I can cancel my sub in less time than it takes to watch an add.

dschuetz 5y ago

First the streaming vendors compete for users, then, as the market is getting saturated (no more users left for subscriptions), they start competing for ads. And then users start cancelling, because of too many or irrelevant ads. It's a vicious cycle, the never-ending story of how the ads industry poisons other markets.

hulitu 5y ago
There are users. The issue is the service. In DE there are almost no politically incorrect movies on Netflix. The quality of video is bad ( with HD and good internet connection), STNG not available STDS9 available in MPEG1 quality ( though MPEG 1 is sharper) and the sound is just terrible. Why pay for something like this ? And now ads ? So they want more money but the only evolution of the service is from crap to crappier ?
- jeroenhd 5y ago
  The quality issue you describe is often because there's simply no higher quality available. Even on DVDs you'll find similar quality video. Availability issues are often because companies have paid big bucks for long term distribution rights within a geographical area. In this specific instance it could also be Paramount screwing you over like Disney did when they launched their own competitor. Years ago, my Netflix subscription drastically reduced the amount of shows I pirated. As the streaming industry started to develop and more and more studios pull their content or try to get people to pay for their own special Netflix, I'm finding myself using Sonarr more and more. Like Steam and Spotify, Netflix solved the accessibility and availability problem. Now the media industry is trying its hardest to undo that and make steaming unnecessarily burdensome again. Their short term profits are ruining their business model once again and when this system eventually collapses, the media companies will complain about piracy once again.
  - kuschku 5y ago
    > The quality issue you describe is often because there's simply no higher quality available Netflix in Germany sends audio in 64 or 96kbps for stereo and 192kbps for 5.1 Video quality is just as bad.

LordHeini 5y ago

Would it really be a benefit tough? I would say no because: Having all your costumers pay a monthly fixed price is the most comfortable and reliable way to earn money. Adds revenue is based on how many people see it, which is not known if have bunch of them in front of a TV, depends on the day of time, what is shown and so on... Adds dictate what you can do. Ever heard a YouTuber say "I can't show or say this or I get demonitized"? That would happen to Netflix too. And Netflix is an international company, showing nudity in German is not a problem. Showing violence in America is no problem but cater to both and try to sell Adds for that is going to be a mess. So it would completely destroy what Netflix is content wise, and thus lose a lot of customers. Generic bland drizzle TV that sells you Soap and other crap like cable TV? No thanks And it is questionable if it increases revenue at all. Streaming costs money. I have a Netflix account which I seldomly use. If I where to watch add based Netflix they would earn way less from me. Maybe that is the case for the average user as well. The author does not know but the people at Netflix probably do.

OtomotO 5y ago

The only thing that grows without limits in nature is a malign tumor and that usually kills the host. Yet for some reason regarding business and economy unlimited growth is the holy grail. Regarding the topic: Sure, do it... I'll gladly move on to some other service. I may be one of the few people actually doing this, but worry not, I don't care for what others do with regards to my decisions. Apart from that there is more and more content on Netflix I am not even slightly interested, all that reality show bullshit that creeps in... brrrr

cameronhowe 5y ago

Netflix shows are already filled with ads. I don't understand all these people who think they have an ad free experience watching on netflix.

gambiting 5y ago
I think there is a certain difference between the show pausing for 5 minutes to show me an ad of a brand new Jeep, that has absolutely nothing to do with the show I was watching, and the character in the show using a brand new Jeep with the logo prominently visible. The first one gets in the way of me enjoying the show, the second one does not.
- cameronhowe 5y ago
  The comparison between a long ad break and a single minor product placement isn't a fair, I've never seen a single 5 minute ad for a car on TV. But I guess it does answer the question of how some people think.
  - gambiting 5y ago
    Ok, then pausing the show for a 30 second ad is equally unacceptable to me - is that better?
  - brazzledazzle 5y ago
    It was obviously hyperbolic.

nly 5y ago

An ad subsidized pricing level would be OK, but if you think I'm paying $21/mo and watching ads, you won't see me for dust. The lack of ads is the #2 USP after good content

dingleberry 5y ago

maybe netflix should package internet fiber optic to ensure quality and exclusivity

peter-m80 5y ago

If netflix puts ads on my subscription, I would shut it down and go back to bittorrent

Traster 5y ago

At the end of the day, after the "Tech disruption" stage of online streaming I think we're going to eventually move back to a point where the focus of the tv industry is back to extracting value. That's what drove the cable TV bundles, and that's what will happen with Streaming once the dominant players are stable. Netflix is reaching the point of stability, some others haven't yet - and those that haven't will either stabilize or go out of business and get bought up by their competitors. The key there is market segmentation. So yes, there will be a thousand different ways including Ads to extract the maximum cash out of every individual customer. That'll be Ads, it'll be paid early releases, it'll be extra subscriptions for Sports and live events, it'll be geo-gating content. It's not complicated, cable TV has been doing it for decades. Once Netflix subscriber count cools, that'll be the only direction left to head, and it'll be really obvious what to do because they know what Cable TV has been doing for decades. Oh and you don't need to pay silicon valley software engineer prices to do any of that.

giords 5y ago

I like how capitalism can boost innovative ideas but I also hate how it's eager to burst them into flames just to jump on the next thing to make more money. Almost every service I know quickly moves from the "it's cool" phase to the "get this other feature you don't need" phase just to get a 0.6% extra of growth. So many great services are now packed with ads and useless features that just make the experience worse and filled with annoying bells and whistles. YouTube and Reddit are just two examples, they're increasingly more annoying to use and if there were decent alternatives in terms of content I'd jump to them in a blink. Instead, for now, I just pretty much stopped using Reddit and go to YouTube only when I truly need, for how much I despise the quantity of ads and smoke they throw at you.

Shadonototra 5y ago

- bad UI/UX - bad performance (wich indicates poor tech) - bad "netflix" productions - price increase - competition growing - lack of reactivity the only thing i remember from netflix is their intro video, and the countless of netflix flops (cowboy bebop for example)

littlecranky67 5y ago

The second Netflix introduces Ads, I'll drop my subscription and go back to the Bay + Torrent - I own a VPN already. The issue is, that at this point in time, Netflix will become a greedy data monster like Google and try its best to profile me to "improve my ad experience". Thanks, but no thanks. VLC does not profile me when I watch a pirated show.

erazor42 5y ago
Same, I like their service but I'd instant drop. Have you try watching TV those days ?
deleted 5y ago
[deleted]

mdoms 5y ago

This guy honestly writes the absolute dumbest stuff on the internet (perhaps second only to PG) but because he does it in a very verbose way HN eats it right up.

nowherebeen 5y ago

I can't think of a faster way to make people unsubscribe. If they are already paying for it and you expect them to watch ads, you must be out of your mind. The ad model only works when the product is free. It's a binary choice.

usrusr 5y ago

No, Netflix should not sell ads. What they should do is start syndicating some of their content on lower tier platforms. Those platforms that might very well be ad-based, perhaps even run by Netflix, off-brand if they don't find any takers. Modeled after the old trickle-down from cinema to video to broadcast. This wouldn't just be another income stream, it would also be an ad for "real" Netflix.

mschuster91 5y ago

No. Just fuck no. Netflix is about the only media one can enjoy without being bombarded with advertising to sell me products I don't have the money (cars) or any need for. The sad reality however is that an user-friendly, ad and spyware-free experience will never get the amount of investor money that the hypergrowth-driven startups get in the hope of establishing dominance followed by rent-seeking.

aaronharnly 5y ago

The Balkanization of streaming services has me ready to try Netflix DVD again. Anyone out there still subscribing? How is it?

manholio 5y ago

The author seems oblivious to the fact that Netflix's main competition are not other streaming or entertainment companies, but filesharing and unauthorized streaming. Netflix won that competition by providing a simple, quality product, at a price point that, for most people, makes torrenting no longer appealing. The moment they try to push unskippable ads down the throat of those consumers is the exact point where a large bulk of them will reassess if spending 5 minutes to hunt down torrents and watch them uninterrupted is a better deal than paying for a service that stops your movie for 5 minutes to show ads. Sure, they could go for short unintrusive ads before the show starts. But you can't generate significant revenue with that, otherwise every TV station would do it and streaming and pay-per-view would not exist.

unfocussed_mike 5y ago
> The author seems oblivious to the fact that Netflix's main competition are not other streaming or entertainment companies, but filesharing and unauthorized streaming. This isn't really true. Netflix's biggest worry is Disney+, I'd have thought -- the streaming company which simultaneously has exclusivity over very nearly a controlling share of US-centric cinema/TV content and is the last to market with the most growth potential. Netflix's second biggest worry is Amazon Video, which is gobbling up studios and franchises all over the place but is at least at this point just a component part of the nearest thing to a universal service provider that the world has seen since the fall of Soviet communism.

deleted 5y ago

[deleted]

ki_ 5y ago

back to torrents? i mean.. that's what people are going to do. The only thing you have to do to defeat torrenting, is offer a better service. It's not rocket science. Putting ads in your streaming service is like the opposite of that.

pr07ecH70r 5y ago

Netflix's content deteriorated the last one year (at least here in Switzerland). Once there is a good show and I finish it, I have to search for new one increasingly longer. They increased the prices (again). Now putting adds, for increasingly more expensive and less quality service will be the final nail.

throwawayffffas 5y ago

I think ads would kill Netflix, if it has ads it's not better than youtube or tv catch-up. Honestly what I think they should do is add micro-transactions. Introduce netflix points, which can be used to do things like skip the wait on shows released weekly. Watch new netflix movies ahead of the rest of the subscribers, etc. The marketing challenge would be to pass it of as getting perks instead of penalizing the rest of the subscribers, the easiest way to do that would be to include a small number of netflix points in the standard subscriptions. It could work like you can watch up to episode 5 this week and wait one week for episode 6 or pay 1 netflix point per episode to watch the rest now. You can buy 1 netflix point for 1 dollar and everybody gets one every month as part of their subscription.

dwighttk 5y ago
…Make people watch shows they think should be doing better (but no one seems to watch them) to get points. Thanks I hate it.
throwawayffffas 5y ago
They could also work as votes, as in please don't cancel this show I love that no one else watches.

AzzieElbab 5y ago

I will cancel my Netflix subscription immediately after seeing first commercial. I can tolerate ads on prime because I get prime video as a bundle and because they only advertise their own content but Netflix is a different story. Selling ads is slippery slop, it ruins core product. Just look at TV programming or latest google search results

throwawayffffas 5y ago
Indeed the fact that prime only advertises other shows on prime is really the only reason I tolerate their ads.
ycombinete 5y ago
Adverts are slippery slop indeed.
rosndo 5y ago
Did you read the article or just the headline? It doesn’t suggest that Netflix should show you ads.

spzb 5y ago

Now TV, a popular UK-specific OTT TV provider, has recently introduced ads. They're really annoying but of course you can opt out as part of their £5 a month premium surcharge (also slightly upgrades your picture resolution and adds surround sound). It's basically just a way of creaming off some extra cash from your more affluent subscribers while keeping the low price of entry. Very similar to airlines and train companies upselling "premium economy" seats which are basically the same as plain old economy about ten years ago.

throwawayffffas 5y ago

I have been increasingly disgruntled by netflix lately. - The app on my laptop will stop working when I move it to my big screen over miracast. - The content here(UK) seems very limited, I feel I have watched everything watchable. - The video quality in the browser is shit. - It feels like the UI is fighting against me when I am trying to find content to watch (this might be because there is not a lot of content). If they add ads I will just drop them on the spot.

ThinkBeat 5y ago

The second Netflix introduces ads I would drop my subscription and never go back. If Netflix at the same time increased the cost of a "non adverstiment" product that is just adding insult to injury. I have structured my media consumption such that I rarely see any ads, and never any tv-ads. If find them painful to watch in a real sense of the words. That means I have dropped a lot of services/products/venues/channels but I have never missed them and certainly not to a degree that would entice me to return. When I visit someone who has the telly on and it runs in the background I have to grind my teeth and try to find some solution to turning it off. A dentist I no longer see did an "upgrade" of the office and got TVs mounted in the ceiling and headphones. As the doctor was drilling away having fun, I was supposed to relax, watch tv and have fun. The drilling was less painful and annoying than having to watch ads every 5 minutes. Closing my eyes was a good option but still the headphones. My new dentist has logic and math puzzles that he or someone he knows has hand drawn artistically on a big sheet of cardboard that he then attatchs to the ceiling. This is so much better in every way. It is also a lot cheaper and better for nature. I have asked him about tvs and thankfully he has no intention of buying any. He changes them out once a month I think

jefftk 5y ago
The article is proposing offering a two tiers, one with ads and one without, which is what most of Netflix's competitors do. That would allow you and others who feel similarly to continue watching ad-free.
- peoplefromibiza 5y ago
  > That would allow ̶𝗒̶𝗈̶𝗎̶ ̶𝖺̶𝗇̶𝖽̶ ̶𝗈̶𝗍̶𝗁̶𝖾̶𝗋̶𝗌̶ ̶𝗐̶𝗁̶𝗈̶ ̶𝖿̶𝖾̶𝖾̶𝗅̶ ̶𝗌̶𝗂̶𝗆̶𝗂̶𝗅̶𝖺̶𝗋̶𝗅̶𝗒̶ ̶𝗍̶𝗈̶ ̶𝖼̶𝗈̶𝗇̶𝗍̶𝗂̶𝗇̶𝗎̶𝖾̶ ̶𝗐̶𝖺̶𝗍̶𝖼̶𝗁̶𝗂̶𝗇̶𝗀̶ ̶𝖺̶𝖽̶-̶𝖿̶𝗋̶𝖾̶𝖾̶.̶ ̶ Netflix to make more money out of nothing.
- rglullis 5y ago
  Imagine if we had a company that managed to produce its products with minimal waste and had an efficient recycling program. It would be a little bit more expensive to run because it was paying for the externalities, but the profit margins were high enough that a business could still be had without destroying itself. Now, a bunch of competitors show up and they just don't care about the environment. They dump all the waste on their neighbors. Their products cost a less than the main company, but they give you a "green option" where you can pay a bit more to offset (some) of the externalities. What you are proposing is that the company goes down in their principles to compete with their toxic competitors. For what?

codingdave 5y ago

> differentiation is no longer based on the user experience, but rather uniqueness I heartily disagree. Ads are a reason to cancel, so that entire point can be put to the side. While the user experience is vastly different between streaming services. Also, the uniqueness of content is a double-edged sword. Netflix has focused on content that pushes boundaries, which is great for some people, but not all. But I digress. The point I was heading towards is that UX is the weak link in stream right now. Good points of a streaming UX are/would be: - Being able to restart a show exactly where you left off, and easily find it. - Navigation being as easy on a roku remote as it is with a mouse and keyboard, including searching. - Reliable buffering and streaming. - Closed Captioning, especially if you can configure font size and placement. - Ease of navigation of all the content. - Good recommendations of what you would actually watch, not what they are pimping that month. - Accurate representations of what is new and popular. I'm sure the list could go on. But no service has nailed the experience yet. They each have their strengths and weaknesses. It is time for streaming to mature - to figure out how to make the experience as good as it can be, step up, and take a leadership position based on just how awesome it is to work with the product.

nfRfqX5n 5y ago

netflix could add a "live" channel that is similar to a twitch channel

martin_drapeau 5y ago

I love Netflix for the instant content and no ads. The fact I can binge watch and not have to wait every week for an episode I love. I pay Netflix not to wait and not to be distracted by unsolicited content (i.e. ads or previews of other shows when I start an episode). Youtube ads drive me nuts. I refuse to pay for a subscription for user generated content. A real paradox here. I am ok with it remaining as is. Just don't bring ads to Netflix! I am happy to pay the subscription. Netflix exploring games and other types of content delivery is a smart move. Going from offering passive content to interactive content is not easy though. Wonder where that will lead...

davidgrenier 5y ago

I think they should enter the gaming market. Perhaps put some pressure on Steam who has just refused to refund a terrible game that I have played for 3 hours.

jefftk 5y ago

The main reaction here seems to be "if Netflix starts showing me ads I'm going to cancel immediately", and Netflix should definitely not do that. Ben's proposal is that Netflix add an ad-supported tier, to expand to people who currently don't subscribe because it's too expensive. This is how Hulu, YouTube, Paramount, etc. already work: you can subscribe with or without ads, priced accordingly.

yalogin 5y ago

This is something I have been thinking about too; the question what’s next for Netflix. They feel done, now they are a phase where they just churn out new content and hope to retain the customer base. Netflix feels like it became more of a media company and less tech at this point. Whether they now have a lower priced tier with ads or not is kind of pointless. Sure they will make more money in the short term but they will inevitably reach the same position after they exhaust that customer base too. They are now a big stable business and they have to come to terms with it.

bsenftner 5y ago

I am actually quite surprised Netflix is not heavily into product placements. They have globally popular shows, if nothing else get a soda sponsorship show the Coke/Pepsi cans are the local labeling for every country a show streams. It is not as if such object replacements cannot be 95% automated now. Seriously. Why subject people to the piss poor overt manipulation of advertising when the service's own programming can embed sponsorship transparently into their shows?

LeanderK 5y ago

Netflix now has competitors. I really dislike ads and I think it will worsen the experience so significantly that I'll just switch. Even those small in-house ads for amazon prime are annoying, I can't imagine what real tv-style ads will do.

dhruvarora013 5y ago

I'm a big fan of Stratechery and the original thought behind most of the posts but I think this one completely misses the mark. Advertising is not a new model in the streaming space - Hulu has done it for years and is one of the things I hate most about it. As most people have said here int he comments - if Netflix adds advertising there would be an uproar. Here are some ways I think Netflix could make money just off the top of my head, * Netflix Live - Amazon does this to an extent and there's clearly a demand for live content. This could be sports, or a Twitch competitor or something original (reality tv meets live maybe). * Pay for different regional content - Every VPN advertises the ability to switch countries to watch Netflix from a different country. I would happily pay more if I got access to the US content in addition to the UK. This is a legal problem more than an engineering problem though. * Netflix Infra - every company out there seems to be creating a streaming service and frankly most of them are rubbish - they constantly buffer, have terrible apps and casting functionality. Netflix could create a product similar to AWS and rent out their infra. Yes it does cannibalize their own offering/product strengths but thats happening anyway as their competitors get their shit together * Merchandising - there are a lot of crazy viral hits that Netflix seems to create - Squid Game was one of the most popular Halloween costumes last year. I should be able to order merch right from the app especially for Netflix originals. You only have to look at Disney to see the possibilities here.

kkirsche 5y ago

If they bring ads to the platform I will never again subscribe and I will say if anyone in my family wants it they can purchase it but I won’t support it. I’m sick of being nickel and fined by every company for every ounce of revenue.

sudden_dystopia 5y ago

Eww no. So that they can end up a cess pool like Facebook, google, twitter, etc? What would be super refreshing would be a tech company that stays private and focuses on a useful product instead of growth hacking.

Overtonwindow 5y ago

I don’t watch advertisements. I avoid them and block them online, I mute them when I have to see them on television, or YouTube. I do not want to see ads and I will do all I can to avoid them. That means canceling my Netflix subscription in a heartbeat.

deleted 5y ago

[deleted]

aSithLord 5y ago

I had a free year subsciption to Paramount+ from my cel provider. I canceled it on day 1 because it had ads. I would do the same to Netflix, even if the service was free.

colburnmh 5y ago

Ads were identified as a way to pay for free broadcast of TV or the reduce the cost of subscriptions for users. If I'm paying a subscription fee for streaming, I expect that part of the service I'm buy is the ability to enjoy my content free of distraction from ads. There are two main reasons for this: 1. They waste my time 2. It encourages the further invasionsions of technology tracking The first one should be relatively self evident. The second is more isideous, and one that I'm more concerned about in the long term. Streaming services selling adds will mean the creation of technology to further push tracking of whomever is view the content into the devices that they stream from: computers, tablets, phones, and TVs. When I'm watching a show after a long day at work, I don't want to have to worry about whether my TV is tracking what I watch, etc. This technology is already being developed by smart tv manufacturers, for example, and already exists for the computer devices. And while ad brokers and clearinghouses definitely want tracking technology in every aspect of our lives, I'm getting fatigued by it all and want some portions of my life safe from the collection and sale of that information. If I'm the product that these companies are selling, and the shows I'm watching are the "bait" to get me to agree with that (this is what print media became), then don't charge me, and tell me that.

formvoltron 5y ago

No they shouldn't sell ads, imo. Instead they should open their platform to third party content, give those publishers a share of subscription revenues, and allow capitalism to work its magic.

emrah 5y ago

Subscription + ads is basically the cable model. It's a slippery slope to how things are today.. plus once ads are in the mix, there is more competition. The only thing that makes awful shows bearable on netflix is that there are no ads

Eddy_Viscosity2 5y ago

"the fact that advertising is a great opportunity that aligns with Netflix’s business" Except that it doesn't. Netflix's business model is providing people with ad-free content. This is just another example of the truism that there isn't anything in the world that an MBA can't make worse.

stillbourne 5y ago

The moment netflix starts selling ads I go back to hoisting the jolly roger.

slategruen 5y ago

The algorithm which encourage subscribers binge watch shows really ended up hurting the product. The problem isn't just market saturation; we also run out of content that's going to be entertaining for users. This is basically the law of diminishing marginal utility. Netflix's shouldn't have copied YouTube in this case. A kind of system where users felt in control when to stop watching should've been put into place.