The Netflix Ad Scare, and Why It Terrified Everyone
It’s not hard to rile the Internet up. When it comes to (rumored) major changes to the Netflix platform though, you can expect a veritable digital riot. Word leaked the other day that the streaming service was testing ad support for a small handful of users, and needless to say things exploded from there. Netflix could potentially stand to make astronomical sums of money allowing third-party advertisers in the door. Hulu does the same for its service, having featured the strategy since its very inception.
The original tests were run only on Netflix’s original programming, with the Internet panicking accordingly. No one wants their Mad Men marathon interrupted every 15 minutes by a commercial for Totino’s Pizza Rolls; viewers get more than their fill with Hulu, often featuring multiple 1-2 minute interruptions for a vast majority of the streams they feature. We’re already inundated by ads watching normal television, and the last thing people want is to have that bleed over to every streaming service under the sun.
Luckily, as it turns out the tests Netflix was running were solely for native advertising, with the company going a step further to assure users that third-party ads aren’t even remotely on the horizon, confirmed on by none other CEO Reed Hastings.
At the most, we’ll be seeing commercials for Netflix shows like Orange is the New Black in the same vein HBO does in short previews preceding their streams. Many have said though that the company will eventually need third-party ads if they want to continue turning a profit, thanks in large part to the cost of their expansive collection of original shows. Should the day come when Netflix needs ads to stay alive, you can bet the backlash will be sizable given the way people reacted to the mere rumor of possible advertising.
So why is it that Hulu can so thoroughly feature an ad-supported platform with little to no real backlash? For one, their platform has featured third-party advertisements since the day they started as a free streaming service. Since then, they introduced Hulu Plus, a pay-to-play service that costs the exact same as Netflix, but features up-to-date episodes for most major network TV shows within 24 hours of their respective airdates. Simply put, people have been dealing with Hulu ads for the entirety of their existence.
Netflix on the other hand is stuck with their current offering; change now and they risk alienating an entire customer base that’s become accustomed to streaming their TV and movies free of ads. The decision of their CEO to echo the sentiment that “no advertising” will be coming to Netflix acts as a double-edged sword though. In many ways, it keeps people happy and reassured. On the other though, it backs the streaming service into a corner should they ever decide to go in the direction of third-party ads. They could potentially face a PR nightmare if indeed they’re forced into advertising to stay in the black in the coming days.
For now, we can rest easy knowing that we can watch Netflix uninterrupted by the noise of the latest Mountain Dew commercial we’ve seen 50 times before. Only time will tell us whether or not Hastings can keep his promise while also keeping his company above water.
Follow Nick on Twitter @NickNorthwest
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