Netflix Ads in Our Future?

Will Netflix ads ever be a thing? Not since the Ross and Rachel will they or won’t they question has there been so much debate among viewers. The streaming game gets more competitive all the time and Netflix announced a price bump early this year for the first time since 2017. More streaming options and a limited revenue source mean the OTT provider is looking for cash. So does that mean the most popular streaming service in the world will allow ads?

Why Add Ads?

Netflix Ads in Our Future?
Netflix ads could finally lead to a profit

Although Netflix has always said it wants to be ad-free, most experts agree the streaming service will eventually need to embrace advertising. They say there’s simply no other way to sustain continued growth. You see, Netflix operates on a yearly loss and hasn’t had any positive cash flow since 2011. Their entire revenue is based on monthly membership fees from three available plans. Other streaming services have additional sources of revenue or use advertising. For example, Hulu offers a cheaper subscription rate for viewers willing to sit through ads. Many feel Netflix should adopt the same model.

Show Me the Money—Netflix Numbers

So what are the numbers for the world’s biggest streaming service? In Canada, Netflix is forecast to have 7.26 million users in 2019. They have 149 million users worldwide across 190 countries. The company has a market valuation and stock price that’s sky-high: $150 billion dollars and $370USD respectively. In March, Netflix was spending $1.4 billion per month on content. Based on the amount of money Netflix is spending, subscriptions alone aren’t going to cut it.

Some feel the time is running out for Netflix’s current business model to work. Netflix ads could be the move that keeps investors investing. There’s an impatience to see how all the money put toward original programming can be monetized. Relying on good content for profitability is playing the long game. The company could run out of investor patience before the content pays off. And the influx of new streaming services is making the situation more desperate.

Original Programming

The success of Netflix hinges on its content. The company is betting on original productions, borrowing money with the hopes of future growth. In fact, Netflix has almost $20 billion in content costs on the book. Even with good content, the competition is fierce. More streaming services means less content to go around. For example, Disney will be pulling content off Netflix over the course of 2019 in anticipation of starting its own service. And Netflix had to pay WarnerMedia $100 million in December to keep Friends another year.

Consumer Ad Acceptance

Netflix has built a reputation on refusing ads and they seem to be stubbornly sticking to that brand proposition. However, some studies show that Netflix ads would generally be accepted. “Cord-cutters” and “cord-nevers” are especially willing to put up with advertising. A study suggests that streaming ads targeted to the viewer have context not found on traditional broadcast or cable tv. The relevance of the advertising makes it less annoying and more inclined to be useful, helpful, or interesting to the viewer. Experts say that if Netflix is transparent about using ads and illustrates the value exchange, consumers may be more open than they think. If Netflix ads mean more original programming and a cheaper subscription cost, that may be an acceptable trade-off.

The Ever-Growing Field of Streaming Services

Here are some of the other streaming services that are scooping up viewers in Canada, often at a lower cost.

  • Amazon Prime. Amazon Prime Canada costs $79 per year or $7.99 per month and includes free shipping, access to Prime Video and Prime Music, plus a few other perks.
  • CBC Gem features live programming, original programming, and CBC Staples such as Coronation Street. Caveat: the service only supports 720p resolution on all platforms.
  • CBS All Access is offering one month free for new subscribers. Once that grace period is over, All Access will cost a monthly fee of $5.99
  • Crave is Bell Media’s video streaming service and starts at $9.99 CAD. However, if you purchase all of the add-ons, you’ll pay $25.99 a month.
  • DAZN is the streaming service for sports fans. It offers live streams of MLS, NFL, European soccer, ICC Cricket and more. Pay $20/month or $150 for the year with the first month free for new subscribers. Sportsnet NOW is another sports-related streaming option.
  • Hayu is NBC Universal’s streaming offering in Canada. Its genre is very specific, streaming only reality tv programming. Cost is $5.99/month with the first month free.
  • Get all the horror programming you can handle for $4.99/month or $49.99/year with Shudder, AMC’s live streaming service.
  • YouTube Premium offers original content made by creators. You can watch YouTube Originals for $11.99 per month.
  • Coming soon: Apple TV+ is set to release in fall 2019.
  • Also coming soon: Disney+ is reportedly planning to charge half the price of a Netflix subscription when they launch. Content includes movies from the Marvel series, the Star Wars saga, and Pixar. Many are predicting a pre-holiday rush when the service launch in November 2019.

Would You Accept Netflix Ads?

Would Netflix ads make you cancel your subscription? What would you need in return to make advertising worth the watch? For now, Netflix remains ad-free. Some think it will stay that way and that ads aren’t the only option. Whatever happens in the future, there are certainly plenty of streaming services to choose from. Surely one of them—or a combination of several—fits your needs.