Netflix Week 2: To Ad or Not to Ad?

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If you were to talk to a life coach, they would probably tell you that a “healthy amount of change” leads to a more fulfilling life. Naturally, you would respond, “well, how much change is a healthy amount?” and would likely receive an ambiguous and insufficient answer.

This week, Netflix probed the same question to its users regarding advertisements and price changes and received a much more explicit answer, one that they likely didn’t want to hear.

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A hallmark of Netflix is its ad-free service

Earlier this week, Netflix conducted a survey of over 1,600 users regarding skippable advertisements before and between programs. According to a CNBC article, 23% of consumers replied they would drop the service entirely while only 41% would definitely keep the service. With a proposed $3 reduction in price in conjunction with ads, only 16% of users would abandon the service.

As a user of Netflix myself, I can understand why advertisements would make some users rethink their experience. One of the best parts of Netflix is the seamless transition between episodes of The Office, devoid of the ads that plague YouTube and other streaming services. However, I find the report to be somewhat of an overreaction; the wide range of content Netflix offers outweighs the few seconds of ads between episodes. While I think it might cause new users to be more hesitant to sign up and instead research other alternatives, namely Hulu, I doubt it would cause 1/4 of users to drop the service. Nonetheless, this news reaffirms the importance of the ad free experience for consumers.

What interests me about this story is the basis for the advertisements: if implemented, the ads would contribute to financing an $8 billion budget increase with the hopes of adding over 700 original programs. Currently, Netflix has 6.2 years of HD video. While I understand the necessity to continue to add content and compete with other services, 700 new shows in one year seems excessive.

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Netflix has over 7,200 movies and TV shows

I see the Netflix content menu as a menu at a diner: if there are too many options, I can’t make up my mind, and sometimes I just leave. Netflix should continue to expand but should be weary of expanding too quickly. Maybe this less than flattering survey will make them rethink their plan to add so many programs.

So when it comes down to it, Netflix has a choice: to ad or not to ad, and while this decision may seem financially motivated, I hope the officials consider the cultural impact their decision could make before any rash decisions.

 

Sources:

https://www.cnbc.com/2018/09/14/about-one-quarter-of-netflix-subscribers-would-jump-if-it-runs-ads.html

https://qz.com/1387706/netflix-amazon-and-other-tech-titans-are-eclipsing-fall-tv-2018/

https://www.wsj.com/articles/as-it-absorbs-time-warner-at-t-expects-profitability-next-year-1536760417

 

 

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