Netflix Should Sell Ads

https://stratechery.com/2022/why-netflix-should-sell-ads/

by jger15 • 4 years ago

96 347 4 years 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

PaulHoule2• 4 years 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• 4 years ago

A big part of that something is not wanting any goddamned ads though.

axg112• 4 years ago

Agreed. Netflix need to decide whether they want to be more like Google/Amazon (multiple diversified bets) or Spotify (one undiversified but very strong ecosystem).

nopenopenopeno• 4 years ago

This is just regular capitalism.

Adam Smith, John Stuart Mill, and Karl Marx all agreed on the tendency of the rate of profit to fall.

https://wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to...

unmole• 4 years ago

Right and everyone agrees Smith and Marx got everything right.

https://en.wikipedia.org/wiki/Labor_theory_of_value

Finnucane• 4 years ago

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

KerryJones3• 4 years 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• 4 years 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.

giobox3• 4 years 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...

KerryJones3• 4 years ago

I did read the article thoroughly, and I think he hasn't seen the larger perspective. I'm an investor in Netflix, and have also dug deeply into many other in-depth analyses of them, and while he says its "long-term", that doesn't mean it is.

Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide), and many companies have experienced what they call "demand pulled forward", i.e. extra growth in pandemic that then falls as pandemic heads towards a close. This is short term, and he has assumed that the slow in growth is the "inevitable decline" of Netflix Subscriber growth.

Also, to be clear, I think Stratechery is an incredible source and usually agree with him. I don't in this case.

I wasn't trying to respond to his points more directly, I was taking on the perspective of what is good for the companies growth.

Just because you "happily enjoy ad-free Netflix, YouTube and Hulu." Doesn't mean most do (and there are strong statistical reasons that indicate that others enjoy it more as well).

Espressosaurus• 4 years ago

The day netflix starts showing ads is the day I kill my subscription to them. And I've had that subscription since they were a DVD service.

ricktdotorg• 4 years ago

why do companies HAVE to get more subscribers?

can't companies continue to exist on the number of subscribers that they have?

can they not reduce costs -- while continuing to service that # of subscribers -- to generate better returns for their shareholders? would such actions cause shareholder/investor revolt?

why?

the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business

how far does this go? when google or amazon or netflix or whomever has an active user account for almost all human beings on the planet, what then?

why DOES a business need to respond when their subscriber growth has passed the nadir for given market(s) at given tiers when the ROI for that business at those tiers and market volume is ~20% per quarter?

are those returns not enough? if the company (Netflix) could keep existing revenues at existing customer volumes while also reducing their infrastructure/delivery costs, would that not be enough??

would they NEED more customers?

why?

jjulius• 4 years ago

In credit to YouTube and Hulu, they give you the option to go ad free...

Unless something has changed and I'm unaware, this is not entirely true for Hulu. I've been paying for that plan for years and they definitely still play ads for select shows.

Edit: I think it has something to do with it being a network show that Hulu hosts the day after it airs on cable, or something, but they're definitely still there.

8n4vidtmkvmk2• 4 years ago

why don't they just stop hiring and enjoy the free money? as long as people aren't unsubbing, they're fine, no? why do companies always have to grow, even to the detriment of the service they're trying to offer? everything becomes shit eventually and then opens the door for the next hot thing that hasn't yet been tainted

willcipriano3• 4 years ago

Hulu isn't ad free, it's less ads if you pay.

zimpenfish• 4 years ago

In credit to YouTube and Hulu, they give you the option to go ad free

Not entirely, though, for YouTube because paying doesn't remove the "And here's a word from our sponsor" segments that people are now using instead of ad breaks, right?

akagusu• 4 years ago

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

mrlonglong• 4 years ago

Do that and I will end my Netflix subscription.

boffinism2• 4 years ago

As a subscriber you wouldn't see the ads, though.

medler• 4 years 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.

axg112• 4 years 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

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.

michaelbuckbee2• 4 years 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• 4 years 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.

zck2• 4 years 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), but they add a $5 ad-supported subscription, that's not changing anyone's experience, unless they choose to switch.

buffington2• 4 years 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.

zck2• 4 years ago

This is a fair critique!

It's just more nuanced than "I don't want to watch shows with ads".

mr3martinis• 4 years ago

Well put. Not to mention that once the platform and business support ads, it's a slippery slope. No ads on the top tier quickly becomes "We'll just show limited ads to the top tier to make up this quarter's shortfall," and so on from there.

manmal• 4 years ago

Just adding one thing: Some Netflix productions already contain product placements. The Tinder Swindler is a giant Google + Apple ad.

badrabbit4• 4 years ago

No! At any freaking tier. What stops them from starting to sell data from other tiers? It will become part if their business model and will eat away everything they do, including content creation. Put that cancer back in pandora's box please!

random314• 4 years ago

This doesn't solve the paid vs ad supported conundrum. The ads produce lesser revenue when targeting leaner wallets. It can kill the brand and not produce significant revenue like YouTube.

tonyedgecombe• 4 years ago

The trouble is advertisers aren't very interested in people who can only afford the lowest tier. Somebody who can only afford that isn't going to be in the market for a Tesla or MacBook or any other product.

The people who can afford the tier without advertising are exactly the people advertisers want to target.

JetAlone• 4 years ago

And they want to not be advertised to, so the power move would be to:

1) Advertise "ad-less" platforms to them that contain subtle advertisements for expensive but effective ad-blocker systems - even augmented reality systems that can block most billboards etc.

2) Have a controlled arms race where ads get even more egregious and bypass the old ad blockers. Sell new ones etc.

3) Add really powerful, comprehensive features to ad blocker systems that absolutely beat all the ads, but they only perform well when integrated with new, up-to-date apple and tesla products.

jeroenhd2• 4 years ago

Not necessarily; there's a depressingly large group of people who have terrible control over their finances and are poor because they're easily influenced into buying expensive items. Definitely not the main source of poverty, but a great target audience for advertisers to manipulate.

MisterBastahrd2• 4 years ago

That doesn't jive with any subscription plan I've seen from any of these companies. Far more likely that they jack up the rates on the pure subscription plans and then carve out a slightly lower priced tier with ad support.

TheRealNGenius3• 4 years ago

Yeah totally! This guy who writes tech/sv vc content totally knows better than a multi-billion dollar industry leader who pioneered their business model on what they should do amirite? /s

Ancalagon2• 4 years 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.

michaelbuckbee2• 4 years 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.

Ancalagon2• 4 years 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.

buffington2• 4 years ago

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

badrabbit4• 4 years 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!)

rosndo10• 4 years 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)

badrabbit4• 4 years 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.

horsawlarway2• 4 years ago

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

vanilla_nut• 4 years 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.

err4nt2• 4 years 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• 4 years ago

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

chrismeller• 4 years ago

“This post contains product placement”

nickduggets• 4 years 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.

scotuswroteus• 4 years ago

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

masterof0• 4 years 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.

vonwoodson• 4 years ago

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

_tom_• 4 years ago

Classic clickbait. Post a terrible idea, that gets people angry, and they click through.

Ignore this and don't click.

pankajdoharey• 4 years ago

If Netflix starts selling ads then only Netflix executives will watch the shows, everyone else will cancel their subscriptions.

MisterBastahrd2• 4 years ago

Yeah, the quality of a lot of Netflix shows just feels inferior to other platforms.

bigiain2• 4 years 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• 4 years ago

You say that but people have been watching cable TV for decades.

oblio4• 4 years ago

It's the long term future of all streaming. After they increase subscription prices and their subscriber growth stops, they will still need to increase revenue.

So they will sell ads. In 20 years streaming will look like cable TV.

hedora2• 4 years ago

And then, someone will invent bit torrent, completing the cycle.

8n4vidtmkvmk2• 4 years ago

less than 20 years i think

systemvoltage2• 4 years ago

This isn’t any other writer. This is Stratechery, damn it. It’s Ben.

Classic kneejerk emotional reaction.

TheRealNGenius3• 4 years ago

Doesn't mean their stuff can't suck. Like this article. Which sucks.

rosndo10• 4 years ago

But that’s clearly not what’s happening here, even if you disagree with the idea.

The title is consistent with the contents of the article. The contents of the article are not deliberately terrible, in fact they’re not terrible at all.

bfrog• 4 years ago

The day Netflix has ads is the day I cancel

chadlavi• 4 years ago

Not today satan.

imgabe• 4 years ago

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

charcircuit• 4 years ago

To be fair there are plenty of piracy sites that do include ads on the web page.

shmde3• 4 years ago

HN crowd uses Ad-blocker.

littlecranky673• 4 years 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".

shmde3• 4 years 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 ?

fomine3• 4 years ago

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

onion2k2• 4 years 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.

wodenokoto3• 4 years 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.

hericium2• 4 years ago

You can turn it off somewhere in profile settings on netflix.com

onion2k2• 4 years ago

Of course, but Netflix itself isn't really designed for that use case. The job of Netflix is to make content you want to watch, not to silence itself so you get some peace.

In your situation I'd use the sleep timer setting on the TV itself to automatically turn it off after a given time. It shouldn't be too hard to align it to match the end of the show.

WalterBright2• 4 years ago

Youtube started with no ads, then ads at the end, then ads at the beginning, then ads randomly inserted in the middle.

It's like the income tax. First for only the wealthy, then the tax "trickles down" to everyone.

baal80spam• 4 years ago

Time to update the quote?

"In this world nothing can be said to be certain, except death, taxes and ads."

mrweasel2• 4 years ago

I've been paying for YouTube Premium ever since it became an option, it's basically the only way YouTube is tolerable. It's by fare the subscription I'm getting the most benefit from. If it was not available, my YouTube consumption would drop to damn near zero. When I see other browse YouTube with ads it feels like you're going mad, it's absolutely infuriating to witness.

It's difficult for me to see Netflix as being any different. I'm already not getting that much value from the service, so why should I pay if there where ads?

One fact which is often overlooked in the non-US markets is the lack of ads. For a service like YouTube, it's the same five ads over and over. There simply isn't enough inventory in the ad space to supply something like Netflix.

webmobdev2• 4 years ago

And ofcourse, most importantly, Netflix (or Disney or Prime or Max) with ads should be free (or really, really cheaper). With internet streaming, we consumers pay for the bandwidth to use any streaming service. And so if Netflix or Disney want to waste my bandwidth with ads, they better be willing to compensate me for it.

SOLAR_FIELDS• 4 years ago

I asked my wife to cancel Hulu live recently because it was $85 USD/month with ads. Insane. She has one or two shows she likes to watch live so I suggested Sling Blue instead. Sling is OK for live stuff but anything on-demand is completely obnoxious with ads. We tried to watch an episode of Atlanta the other day and Sling injected more ads than the length of the show, eg it was longer than 30 minutes of ads to get through the 30 minute show. The inevitable that everyone said was going to happen is finally a reality - streaming platforms are back to where cable was 20 years ago.

mdasen• 4 years ago

With internet streaming, we consumers pay for the bandwidth to use any streaming service. And so if Netflix or Disney want to waste my bandwidth with ads, they better be willing to compensate me for it.

You pay for electricity and TV companies have never compensated you for the electricity used during their commercials.

There are lots of occasions that we don't get compensated for things that have costs. For example, let's say you're driving in traffic. There's a stop light. Two cars from the other direction turn onto your street after their light has turned red ("it's been yellow for 3 seconds, but I don't wanna wait"). Your light turns green and a couple cars get through, but you have to wait another light cycle because of those two cars that illegally ran the red light. That's another minute or two of idle fuel usage. You don't get compensated for that and what the other drivers did was illegal. At least with Netflix you'd be agreeing to the ads and a price with a very real option of just not subscribing.

There are so many things that you pay for that you don't get compensated for in that micro-accounting way. Heavier vehicles destroy roads requiring them to be repaved a lot more, but the drivers of those heavier vehicles don't pay for that. We all do. It costs way more to deliver things to people in rural areas, but the USPS and many online stores will charge the same shipping for someone in Alaska or rural Montana as someone in NYC despite the fact that the person in Alaska might be only accessible by air and the person in rural Montana might be the only person receiving a package for 5 miles. They might be using $1 worth of fuel just on the end delivery for one person in an area like that, never mind the amount of time that it takes to deliver the packages in such a rural area. ($4/gallon of gas, 20 MPG fuel economy, and a 5 mile distance would be $1)

I'm not sure what your situation is (maybe you're on a really bandwidth restricted connection like HugesNet), but "we consumers pay for the bandwidth" is probably one of the smallest pieces of this world to worry about getting compensated for.

sliken• 4 years ago

If I see a netflix ad I cancel. Just like I did with hulu+ (the paid service), no way am I going to pay a video streaming to waste my time and bandwidth with ads.

Similarly first time I see a youtube ad, I'll cancel my youtube premium subscription.

01100011• 4 years ago

I agree. Yet I feel compelled to say that the HN crowd is not necessarily representative of the general population. I've missed out on some great ideas I thought were dumb because I made the mistake of thinking my brain and interests are similar to others'.

doldisod6• 4 years ago

Similarly first time I see a youtube ad, I'll cancel my youtube premium subscription.

Youtube has ads for the lower tiers, yet you’re still subscribed.

This article is explicitly not arguing that Netflix should show ads to existing subscribers like yourself.

err4nt2• 4 years ago

Totally agree. I am paying to _not_ see ads. If they show me ads anyway I simply won't use the service.

madaxe_again• 4 years ago

Netflix is full of ads, but you’re so used to them you don’t see them. I can’t remember what it was I watched the other night, but I definitely noticed the 45 second sequence of cereal box, bowl of cereal, cereal box, bowl of cereal, character going “mmm it’s delicious”, cereal box, end scene - and this is just one of many examples. Next Netflix production you watch, pay attention for the placements - there are a lot. Some subtle. Some as subtle as a hammer to the forehead.

hericium2• 4 years 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• 4 years 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.

WalterBright2• 4 years ago

They can also switch to "premium" content, which you pay extra for.

hedora2• 4 years 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.

boffinism2• 4 years ago

The post doesn't miss that. The post is about that.

bigiain2• 4 years 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.

rosndo10• 4 years 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.

c0nducktr4• 4 years ago

I'm right there with you.

I hate the advertising industry.

Advertisements are a service-killer for me, and when that happens I'll also share my ad-free files with everyone I know.

bloodyplonker22• 4 years ago

It's very ironic because a lot of people paid for Netflix to "cut the cable" and not get commercials in the first place. Now you're saying they have to pay for that yet again?!

shmde3• 4 years ago

Disney Hotstar in my country already does this.

chupchap• 4 years 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• 4 years 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• 4 years 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.

yessirwhatever2• 4 years 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.

doldisod6• 4 years 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.

yessirwhatever2• 4 years 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• 4 years 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?

c0nducktr4• 4 years 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.

EnKopVand2• 4 years 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.

addandsubtract• 4 years ago

Greed is just the byproduct of uncapped capitalism. Disincentivise the pursuit of constant growth, and the world would be a lot less evil.

asoneth• 4 years ago

To be fair, it's not just investor greed that does it.

Plenty of good managers and engineers just want more money too. Once the hyper-growth stalls, many early employees cash out their lottery ticket and leave to take higher-paying jobs elsewhere. They don't care as much about maintaining the product and experience that they built as they do about making more money.

(And this is exacerbated by the fact that many people prefer building new things than to maintain the existing things they built.)

hurril2• 4 years ago

Because then they will get overtaken. The growth slowdown will turn into a growth stop and after that they will begin to shrink.

hutzlibu• 4 years ago

This is the fear, but is it reality?

There are limited humans on this earth and if you consider, that you cannot reach them all and there is also competition, which realistically also takes some of the market, why not be fine with reality and a saturated market you cater for well?

mrweasel2• 4 years ago

Unless you're a shareholder, is that actually a problem?

There would be nothing wrong in Netflix say: We're no longer able to buy the shows and movies we'd like, because the studios are setting up their own streaming services. We now going to shift towards creating less content, but higher quality.

As I see it, one of Netflix major problems is the quality of content. They can't buy quality content anymore, so they're attempting to just make as much content as possible, hoping something will stick. Writing have been a major problem for Netflix for years. They're able to create an initial good season one of a show, but are never able to deliver in the following seasons.

Personally I don't see the problem in Netflix becoming a niche player with their own high quality content, that could allow them to lower prices as well. It's only a problem because their shareholders overpaid and insist that Netflix remain a major streaming platform in order to recover their investment.

hetspookjee• 4 years ago

I think it’s the tragedy of public traded companies that eventually there’ll be such an overwhelming demand from the shareholders -given that they often hold a majority combined to just the directors- to monetise and provide dividend and/or a raising share, that they must go below the belt with tactics, like letting go of the initial core values.

If they do not do so, odds are big - but no given - that a competitor with a enormous bag of VC money might enter the scene and subsidise the losses like any other platform gameplayer does these days, that might undercut the incumbent in quality and slowly but surely garner enough market share to start flipping the coin, and the process either resets itself or doesn’t.

One must be constantly on top of the game to remain at the top, being handicapped by fickle things like principal values and the like.

I wish there was a combination of ngo and corp that focussed on solving the problem with the aim to dissolve oneself when the problem is gone, instead of becoming the problem.

dx034• 4 years ago

Not all public companies panic if they don't grow fast over time. But other industries are also harder to penetrate by startups. But I wouldn't blame stock markets for this obsession, especially as companies already show this pre-IPO.

usrusr2• 4 years ago

"The tragedy of publicly traded companies" sounds like a very useful term! But I don't think that you need to look any deeper than the basic market mechanism of shareholders with realistic expectations happily selling to future shareholders with higher expectations (e.g. unrealistic expectations). If the latter exist, they will offer more than the former think the shares are worth, deal. It's a market mechanism as basic as gravity, "race to the least pessimistic".

The only thing that sometimes prevents it is when holders are emotionally attached (old family stock or brand fandom) or when holders have a strategic need to prevent certain control scenarios (often nationally flavored).

chaostheory4• 4 years ago

This would only be possible if you don’t take investor money. Investors expect their investment to keep growing. Unfortunately, while it’s hard to build a Netflix with other people’s money, it’s near impossible to bootstrap.

The closest one was Crunchy Roll I think, and that was only possible since they were essentially pirating their content if I remember correctly. In the end, even with piracy it wasn’t sustainable until investor money came into play.

HWR_146• 4 years ago

Investors expect to make money from their investment, but not necessarily that it keep growing. For instance, investors in commercial real estate expect steady income and some appreciation. They do not expect hockey stick growth. (I'm talking about those buying commercial real estate, not developers).

apexalpha• 4 years ago

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?

Shareholder Value.

Traster3• 4 years ago

This is a very natural phenomenon, and there's an obvious reason. When you're a growth stage company you're valued as a growth stage company, your Price:Earnings ratio will be high, because investors are already pricing in the future earnings. As your growth slows your P/E ratio drops because investors no longer expect your earnings to go up. This is fine, it's the natural process when you're saturating your market. But it causes all sorts of problems - all your engineers are paid in stock for example, and now they're underpaid versus the industry. That's fine, you don't need the same quality of engineers when you've dominated a market. You've built the thing. It's done. Let them go and build the next thing.

But the engineers aren't the only ones who are paid in stock - so are all the executives. And they want money! So you must keep the growth up. So at this point you do what Netflix is doing - start exploring other markets that you can use your existing skills to dominate. Now most likely that will fail, because by nature, you're taking the money from the home run you hit and betting on hitting another even bigger home run. For every 1 Netflix there were 10 failed competitors. But Netflix now has to try and be another Netflix, but will most likely spend their money creating 1 of those 10 failed competitors.

bborud2• 4 years ago

There is actually another way: become more. Google and Amazon are companies who kept growing because the scope of what they did kept growing. And they kept getting better at what made them big in the first place at least for another decade. Go back 20 years in time, and Google was a search engine. Today they are much, much more than that. Go back 25 years in time, and Amazon was a book store.

Netflix is just a movie service. And it is a movie service that hasn't gotten any better for a very long time. The fact that I have to spend a lot of time finding content to watch and Netflix mostly showing me the surface layer of content over and over again is extremely frustrating. It just isn't a good experience. They are about as frustrating as every other service on the market because they deliver an experience that isn't anything special: it is just as bad as every other competitor.

If they have no ambition to deliver a better service than everyone else, then why would they attract more users, and more importantly, have more users pay more for their service?

Right now Netflix is an acceptable service, but nothing more. They still have some way to go on quality. And if they started becoming the company that dares to do things a bit differently, and to do things better, this could be a platform to launch into other areas.

orzig• 4 years ago

I was at a company whose P/E was super high as we saturated our market. The CEO would publicly state that the price didn't make sense to him, and we tried to find more home runs. In the end, inevitably slowing (but still positive and profitable!) growth caused a panic and investor-mandated layoffs.

I'm sure it could have been handled better, but elegantly transitioning out of hypergrowth is a surprisingly hard problem, even when you recognize it as such.

dgb234• 4 years ago

That's fine, you don't need the same quality of engineers when you've dominated a market. You've built the thing. It's done. Let them go and build the next thing.
But the engineers aren't the only ones who are paid in stock - so are all the executives. And they want money! So you must keep the growth up.

This might be why so many (not all) great software services and products eventually turn into crap. They start out focused and well made, caring about their users and workers. Then the owners and decision makers try to squeeze everything out of it and carelessly add bloat, while "optimizing" internal processes into oblivion. And all that because some people simply cannot get enough stuff, is a business' goal always to extract value and power for the few despite already having massive market share, a good name and happy customers?

There is another path: invest in the long term by putting workers and customers first. Give back, invest in R&D, education, open source, social stability, the _quality_ of their product, growth of their workers and relationship with their customers.

If this was the common path of successful companies, we would live in a different, fairer, more sustainable advanced society.

darkr• 4 years ago

all your engineers are paid in stock for example, and now they're underpaid versus the industry.

I was under the impression that Netflix generally doesn't offer stock to engineers, but instead pays above market salaries.

throwanem2• 4 years ago

You use the word "nature" and its cognates surprisingly frequently in this description of an entirely artificial set of processes.

sudden_dystopia4• 4 years ago

This is not a “natural phenomenon”. It’s a phenomena that is a result of being a publicly traded company since investors demand growth. Stay private and you can set your own goals. Growth has to end at some point other wise public companies are really just little “Clippies” optimizing for growth and destroying everything in its path.

neximo64• 4 years ago

The issue is its possible, but if you dont someone else will, then will buy you and make you do the thing you were avoiding.

Relative growth is the ultimate leverage of power.

And while you think that might be some line or something it isn't. In the early 2000s banks basically did that, if you played it easy one that geared up more simply bought you up and they all went big into MBSs

HWR_146• 4 years ago

Facebook lost half it's value (maybe literally by now) because they stopped growing on just their flagship product (the MAU went down by a rounding error).

So why not provide a sustainable service? Because it's not valued in the market.

lotsofpulp3• 4 years ago

Sustainable service is valued, at the rate of inflation. If you want 20% annual returns over inflation, then you need to provide commensurate growth.

dgb234• 4 years ago

Facebook degraded in quality and tried to squeeze everything out of their users instead of improving quality and innovation. It's short term tactics.

panick21_3• 4 years ago

What are you talking about? Of course its valued, that literally why those companies have value.

But of course its valued far less then a growing company.

This seems to be fairly basic and totally logical. Stock market is forward looking. If your future it the same as present that fine but it means over time you shrink relatively and you are likely not robust against paradigm changes.

nabla9• 4 years ago

Because increasing returns of scale combined with the increasing competition makes long-term profitability uncertain.

Netflix is the only big streaming service that relies on streaming as the only source of revenue. Netflix has to spend huge sums every year on new programming to keep subscribers. Disney/Hulu/ESPN/Hotstar, Amazon, Disney, Apple, Peacock, HBO Max, and YouTube plan to make deep cuts into Netflix revenue in the future.

productceo• 4 years ago

Making companies chase growth is good for the economy.

Assume for the sake of contradiction that we the humankind decide not to incentivize companies to chase growth. This would mean the humankind is enabling a company to sustain its current position with existing assets and operations and nothing new. Since the company has no incentive to grow (introduce something new), the rational company will not create new additional value. Since the company is in a market dominant position, no new entrants will be able to create new additional value.

Curious to see if others see any ways to protect the interests of the humankind while taking away the incentives for market dominant companies to continue to make progress.

DavidVoid• 4 years ago

"Growth for the sake of growth is the ideology of the cancer cell."

Lio2• 4 years ago

I've long been a paid sub-scriber to Strava. I was so happy when Mark Gainey returned to the company and returned focus to making it just a really great experience.

I think I even remember hearing him say in an interview that he would be happy to just keep the current number of subscribers and make it a more focused product.

That matters because there was a time when it seemed to be turning into just another social network. At that time the major new feature seemed to be "inspirational blog posts". That's not for me.

For about a year I cancelled my subscription but returned when the focus when back on providing useful features like route planning.

I wish that Netflix would just concentrate on providing a better experience and better content instead of degrading the existing experience even more.

peoplefromibiza3• 4 years ago

Why does it always have to be growth or bust?

because they borrowed too much money that they need to pay back.

sudden_dystopia4• 4 years ago

Because it’s a publicly traded company and investors demand growth. I really wish companies would stop listing after IPO and just stay private.

0des5• 4 years 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

mr_toad• 4 years ago

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

anothernewdude2• 4 years ago

I would drop that subscription so fast.

dschuetz• 4 years 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• 4 years 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 ?

jeroenhd2• 4 years 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.

kelnos• 4 years ago

DS9 was never remastered to HD like TNG was. The quality of DS9 you're getting is the best quality that exists.

Also this has nothing to do with codec; Netflix doesn't send anything using MPEG1, as it's an old, inefficient codec.

no_time• 4 years ago

In DE there are almost no politically incorrect movies on Netflix.

Are there any in other regions? Can you give some examples?

hnlmorg• 4 years ago

DS9 is only available in SD. It was never remastered into HD like TOS and TNG were (if I recall correctly TNG ended up losing money and that had far less VFX that needed re-rendering than DS9 does). Netflix almost certainly wouldn't be serving any video in MPEG1 (not even SD content) because it's poorly optimized for internet connections. If the original sources are MPEG1 then they'll have re-encoded them into into another format.

Also the issue with some shows not being available in some regions is a licensing problem. You need to take that complaint with the studios rather than Netflix. They would much prefer to do away with the problem of localized licensing deals.

LordHeini• 4 years 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• 4 years 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

cameronhowe2• 4 years 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.

gambiting2• 4 years 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.

cameronhowe2• 4 years 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.

nly• 4 years 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• 4 years ago

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

peter-m80• 4 years ago

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

Traster3• 4 years 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• 4 years 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• 4 years 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)

littlecranky673• 4 years 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• 4 years ago

Same, I like their service but I'd instant drop. Have you try watching TV those days ?

mdoms• 4 years 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• 4 years 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.

usrusr2• 4 years 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• 4 years 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.

Lurkynerd• 4 years 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.

aaronharnly• 4 years ago

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

manholio• 4 years 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• 4 years 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.

ki_• 4 years 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• 4 years 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.

throwawayffffas5• 4 years 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• 4 years 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.

throwawayffffas5• 4 years ago

They could also work as votes, as in please don't cancel this show I love that no one else watches.

AzzieElbab• 4 years 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

throwawayffffas5• 4 years ago

Indeed the fact that prime only advertises other shows on prime is really the only reason I tolerate their ads.

ycombinete• 4 years ago

Adverts are slippery slop indeed.

rosndo10• 4 years ago

Did you read the article or just the headline? It doesn’t suggest that Netflix should show you ads.

spzb• 4 years 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.

throwawayffffas5• 4 years 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.

ThinkBeat2• 4 years 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

jefftk4• 4 years 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.

peoplefromibiza3• 4 years ago

That would allow ̶𝗒̶𝗈̶𝗎̶ ̶𝖺̶𝗇̶𝖽̶ ̶𝗈̶𝗍̶𝗁̶𝖾̶𝗋̶𝗌̶ ̶𝗐̶𝗁̶𝗈̶ ̶𝖿̶𝖾̶𝖾̶𝗅̶ ̶𝗌̶𝗂̶𝗆̶𝗂̶𝗅̶𝖺̶𝗋̶𝗅̶𝗒̶ ̶𝗍̶𝗈̶ ̶𝖼̶𝗈̶𝗇̶𝗍̶𝗂̶𝗇̶𝗎̶𝖾̶ ̶𝗐̶𝖺̶𝗍̶𝖼̶𝗁̶𝗂̶𝗇̶𝗀̶ ̶𝖺̶𝖽̶-̶𝖿̶𝗋̶𝖾̶𝖾̶.̶ ̶

Netflix to make more money out of nothing.

rglullis4• 4 years 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?

Lio2• 4 years ago

Right with you on that. I hate the loss of control when made to watch ads.

I've already dropped 1 streaming service (NowTV) for forcing me to watch trailers before the shows I actually pay to watch.

I'm considering dropping Prime for the same reason. With Prime you can at least skip trailers but why can't I just opt out of the bloody things the first place?

Auto-playing anything is tedious annoying. Auto-playing, _unskippable_ anything is an abomination in my personal opinion and not something I will pay for.

survirtual• 4 years ago

I just want to say, I am so happy you and others here are voicing this opinion on ads. I agree whole heartedly and avoid them like the plague — because they are a plague. A social disease infecting nearly every facet of modern reality, and rotting away at it.

In my own spaces, nothing with a logo is allowed to be displayed. This makes for a significantly better feeling space. In the past, people have walked in and made comments like “it feels so good in here!” — I attribute it in large part to eliminating the nonstop psychic bombardment of advertising.

When buying new products, I go to significant lengths making sure the item has an ad that can be managed. If I cannot find a product with a logo that’s easily removable, I do not purchase for the most part.

If a streaming service shows an ad to me, it goes off or I leave the area. It is simple.

Other people do not have the right to intrude in my cognition against my will, ESPECIALLY these gluttonous people running megacorporations. They are reducing consciousness for a quick buck against our will. Put another way, they are injecting their ego and greed into anyone possible against their will. I find it to be a type of psychic assault analogous to certain depraved physical assaults relating to self-propagation.

My intuition says ads make us dumber, more compliant, poorer, worse thinkers, more impulse driven, and more subject to external authority; among other pacifying and stupefying impacts. It is a disease worth fighting against.

saiya-jin• 4 years ago

I haven't used TV for any kind of broadcast, or literally anything that would in any way contain ads for past cca 15 years. TV I have has no wifi connection, never had one, never will have.

I've become physically allergic to ads, anywhere. The way they are done reminds me of those drawings showing some nasty fugly stuff being squished into consumer's brain.

This causes minor issues sometimes when we visit some friends and they have a TV blasting all the time, with their kids being fairly addicted to general media consumption. Anytime this happens and I see how they are glued to phones or consoles is a stark warning about choosing different path for my small kiddoz. Such a path you can lead them on by example.

The amount of time we have thanx to this to spend on more important matters in life is non-trivial.

TheBozzCL• 4 years ago

Man, I try to explain the diseased nature of the modern advertising and people look at me like I'm crazy.

But look at TV/radio broadcasts. Look at the streets you walk on. The websites you browse. It's literally everywhere, and its only purpose is to catch your eye to make you feel like you need to buy stuff. And they will stop at nothing to achieve that, including making you feel inadequate or abusing your weaknesses.

And in the last 15 years, we've let these unscrupulous people gather all sorts of data on who we are and what we do, which they use to target us with the ads that manipulate us the best.

That is what sounds crazy to me.

Preaching to the choir, I know. It amazes me that most people don't seem to care all that much. I wonder if we're just overly sensitive to interruptions and manipulation.

lvl1023• 4 years ago

I am so tired of these comments about Netflix:

“I am going to cancel if Netflix splits disc from streaming.”

“I am going to cancel if Netflix raises prices.”

“I am going to cancel if Netflix makes it difficult to share passwords.”

“I am going to cancel if Netflix cancels my shows.”

“I am going to cancel if Netflix introduces ads.”

Netflix did more to free the market from the stranglehold the networks had for decades. If you want to go back to paying $150 per months for cable, be my guest. People seriously have issues with Netflix raising prices 25-30% in the past DECADE while their catalog has increased significantly?

batch12• 4 years ago

I will absolutely cancel Netflix if they introduce ads. I will cancel Netflix if they cancel shows I want to watch. I don't owe them anything in addition to the money I have already paid them for their service. Their business model and disruption of cable doesn't entitle them to my future money.

rglullis4• 4 years ago

Piracy is still free.

mewpmewp2• 4 years ago

The alternative is actually torrenting.

If there was an ad free service, where you can easily watch ANY tv show or movie when you want it, I'd pay $50+/month for it.

greedo• 4 years ago

While their catalog has increased significantly in the last decade, most of it is shows they've produced or bought. The quality of these shows is hit or miss. I didn't subscribe to Netflix for serial productions. I subscribed for movies. And over the last decade their catalog has decreased significantly.

ThinkBeat2• 4 years ago

Except that now there is a lot of competition in the Netflix space.

Part of the reason cable is/was so expensive is that you wanted more than one channel so you could see shows on other channels.

Netflix is now just s channel, HBO, Amazon, AppleTV (whatever they call it),Disney. Want to watch Boba Fett but still follow a show on Netflix, now you are paying for two channels. (and so on).

Of course you can rotate, Netflix one month, Disney the next, but by spacing out release to once a week, they can hook people into subscibting to several streaming services.

tomjen3• 4 years ago

I have a problem because their catalog has decreased significantly. Out are good old shows with many seasons and twenty shows per season. In are a few formularic Netflix originals with two seasons and 8 to 10 episodes a season.

Not all is bad, of course, but I quickly run out of good content and if I see something I would like to watch later, it is often gone by then.

Then I can search for it, only for Netflix to show me a bunch of irrelevant stuff not even close to what I was looking for.

peoplefromibiza3• 4 years ago

Netflix did more to free the market from the stranglehold the networks had for decades

but we don't have any obligation to keep supporting them it they f*ck up

NoOneNew• 4 years ago

You fail to recognize one important factor. Those that did cancel dont show up to these comment threads anymore.

Me being one of them for I think I'm about to hit the 2 year mark soon on being sans-Netflix.

Any show I like and publicly does well, cancelled on season 3. Shows that have been popping up are utter trash. I was thinking of doing a month when Cowboy Bebop dropped... yea... I'm glad i didnt. I'm waiting for Witcher season 3 to drop, then I'll get it for a month and cancel it.

Their business practices are staying from, "deliver awesome content in an awesome way" to "squeeze blood from a rock".

Back in the day, Marco Polo was their shit tier show and it was awesome. The netflix exclusives that were coming out 2 years ago were trash and I could see the writing on the wall that it wasn't going to get better. What I hear about lately, it's all a fucking joke. They're hitting the theres a quality in quantity mindset and the numbers are showing that it's not working.

Maybe if they placed more focus on good movies and shows instead of the business models LITERALLY EVERYONE RAN AWAY FROM TO GET NETFLIX IN THE FIRST PLACE... they might be complaining that there aren't enough good writers and filmmakers out there because they already bought up everyone. That's a better and much more respectable problem to have instead of being a silicon valley bro who worries about "scale" during every conversation.

Jayakumark• 4 years ago

Very soon Streaming services might look expensive than cable, if you want to buy 4 or more services out of discovery+, disney+, netflix, showtime, hbo, peacock, cbs hulu, paramount, fox, appletv+, youtube red etc..

destroy-2A• 4 years ago

When Foxtel or Optus (cant remember probably both) entered Australian cable TV market they promised no adds, and there were zero adds, a few years later they introduced adds and increased the price in the same letter to subscriber. most people kept it.

kup0• 4 years ago

Glad to see a number of others that feel the same as I do. I would love for this sentiment to grow.

codingdave• 4 years 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• 4 years ago

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

martin_drapeau• 4 years 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• 4 years 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.

jefftk4• 4 years 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• 4 years 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• 4 years 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• 4 years 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.

sys_64738• 4 years ago

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

dhruvarora013• 4 years 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• 4 years 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_dystopia4• 4 years 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.

Overtonwindow2• 4 years 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.

aSithLord• 4 years 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• 4 years 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• 4 years 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• 4 years 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• 4 years 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• 4 years ago

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

slategruen• 4 years 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.

g-technology• 4 years 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.

hoseja2• 4 years ago

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

Netflix Should Sell Ads

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