Some Netflix users are noticing something weird before and after their Sense8 and House of Cards: Something that looks an awful lot like an ad. If Netflix is plunging down the path of advertising to monetize its services, that would be a truly terrible idea—and as rumors on the topic swirl around the Internet, it would appear that the company is aware of it. This little experiment may not last long, unless the company wants to alienate its customer base.
If Netflix is going to get ads, I’m going to be pissed. The reason I pay for it is because no ads literally.
— Tyler Hoechlin Army (@HoechlinArmy) June 2, 2015
GODDAMMIT NETFLIX http://t.co/G9U8B6cz5X pic.twitter.com/9BGRqKzTyi
— Gawker (@Gawker) June 1, 2015
netflix thinking about showing ads?
— frank bullitt (@the_blueprint) June 1, 2015
they’re just determined to kill the goose laying golden eggs, huh?
Somehow I don’t think people will pay $10 for Netflix with ads. We do it for Hulu b/c the shows are new.
— Christina Warren (@film_girl) June 1, 2015
The streaming video giant, just over 62 million users, is miles ahead of its competitors—Hulu Plus and Amazon Instant. Netflix has the edge of longevity and name recognition, being one of the oldest and most established streaming video services, and it also leads the pack on innovation. Netflix was the first to develop original programming, for example, and it also offers several levels of streaming plans to accommodate different users.
One of the reasons it’s particularly popular, though, is the lack of advertisements. Netflix’s current strategy is a tradeoff, running episodes without interruption for a nominal monthly fee. Amazon Instant intelligently followed in the firm’s footsteps, folding Instant services into its highly lucrative Prime subscription program. As many as 40 million members may be using Amazon Instant, but Amazon is cagey about its numbers so it’s hard to know for sure.
Hulu, on the other hand, uses a traditional monetizing model, forcing users to endure ever-longer commercial breaks between chunks of episode. It’s getting to the point where it’s time to start congratulating Hulu for offering some television sandwiched amongst its advertising.
Hulu Plus offers more programming than the free service, but one thing the paid option doesn’t do is allow people to turn off ads. That might explain why only six million people bother with the service.
The day Netflix starts having ads is the day all hope is lost
— Comedians In Cars Getting Coffee Podcast (@ComedInCarsPod) June 1, 2015
In fact, the issue has become such a PR problem for Netflix that CEO Reed Hastings even took to Facebook to reassure loyal fans. “No advertising coming onto Netflix. Period,” he wrote on Monday. “Just adding relevant cool trailers for other Netflix content you are likely to love.”
“Don’t freak out: Netflix is not running ads” http://t.co/CEnaS5Z0Yg
— Netflix (@netflix) June 2, 2015
Some users might want to quibble with the difference between a trailer and an ad. Endless pitches for pharmaceuticals are definitely more annoying than a “trailer,” and Netflix is famous for its highly accurate prediction algorithms, but that doesn’t mean viewers want to see them before content—especially when trailers are breaking up a Orange is the New Black marathon.
CordCutters highlights the hairsplitting on trailers versus advertisements and warns that advertising may be inevitable on the service:
Clearly Netflix is looking for subscriber feedback by testing ads. Based on what we’ve heard, they are trying a variety of ad formats to find the best fit for the service. Since Netflix has made the ad testing public by testing on the general subscriber base, it appears they are very serious about implementing ads in some format.
This is not a question of if but when and how advertisements will be implemented across the network, the site suggests. However, if Netflix encounters enough backlash, it may need to reconsider the decision to explore advertising, as even the mightiest Internet giants can fall (see: Myspace). While enraged users might want to retain access to the site’s award-winning original programming, they might take to pirating over legal viewing to avoid unwanted trailers.
https://twitter.com/paigemushaw/status/605394740511666176
YouTube has been implementing a similar idea, running actual ads before content. It doesn’t allow users to skip or click through the promotional material, and it’s unclear whether Netflix will force viewers to view trailers or not. If it does, that’s likely to anger viewers who expect to enjoy total control over their media. The same goes for post-episode trailers, though many users skip to the next episode rather than lingering over credits, so this may be less of a problem.
https://twitter.com/vmbrasseur/status/605451215791456256
Thomas Newton at Recombu argues that this may not be a major dealbreaker for Netflix if the site is smart about how it implements advertising:
This doesn’t sound too dissimilar to the next episode previews of shows like Better Call Saul which users could play at the end of an episode, if they wanted to…Netflix spokespeople at the time said that the service routinely trials new features in the wild with selected customers and not all of these features are ever implemented fully.
If he’s right, Netflix will be responsive to users. But the fact that the Internet is already up in arms at the prospect of advertising should be a worrying sign. Rumors spread readily across the Internet, and when they go bad, they can go very bad, very quickly. The attempt at reassuring users might be able to stamp out fires, but perhaps not fast enough, as Jamie Curd reports at Gadget Helpline:
This was noted by a number of users who of course then shared their disgust on social networking sites. Others who hadn’t even seen the apparent commercials also got involved, claiming they would boycott Netflix if ever an ad should ever appear.
Some suggest that the current model, especially with a growing budget for original programming, is unsustainable. The argument that Netflix will be forced to turn to ads to support itself is a popular one when one looks at defenses offered by Hulu, an ad-based service, or even Amazon, which funds Instant through its Prime subscriptions. However, the solution to sustainability is not necessarily to upset users.
Netflix has already raised prices, and it’s likely to do so in the future. Increasing monthly subscription fees—and building a bigger customer base—is one way to address the issue, as is working out licensing deals with studios like Fox to access more current episodes. The site could also retain a tiered model with different subscription options, including affordable choices with fewer episodes or video at a lower resolution—something people with poor Internet service may actually appreciate.
The introduction of ads the company insists aren’t ads could be a bad warning sign for Netflix and streaming video in general, or it could be evidence of an experiment that went haywire. Websites introduce limited rollouts of experimental features all the time, and sometimes public response is highly instructive: In this case, Netflix might want to return to the drawing board when it comes to trailers on their programming.
S.E. Smith is a writer, editor, and agitator with numerous publication credits, including the Guardian, AlterNet, and Salon, along with several anthologies. Smith also serves as the Social Justice Editor for xoJane and will be co-chairing Wiscon 40—the preeminent feminist science-fiction conference—in 2016.
Photo via guzzphoto/Flickr (CC BY ND 2.0)
