Although Netflix tested water with commercials, the move wasn’t welcomed by its subscribers. Since then, the streaming giant has said that its offerings won’t contain any commercials. Interestingly, Hulu and NBC executives have claimed that it won’t be the case in future as Netflix will be required to include commercials at some time in future.
During her appearance at a Cannes Lions panel earlier on Wednesday, Linda Yaccarino, ad chief for NBCUniversal stated that as the demands for new programs go up, Netflix will be required to invest more in order to create shows which might not be popular. Most importantly, Yaccarino stressed the importance of brand recognition as she said that Netflix will eventually need to increase its resources to market its offerings going forward. In order to do so, the streaming company will either need to increase prices of its subscription or include ads to offload the costs.
While the comments might be surprising, they hold considerable amount of grounds. Firstly, despite boasting over 150 million subscribers on the platform, all of Netflix originals haven’t been hit among audiences. Most importantly, latest studies have suggested that Disney’s upcoming streaming network Disney+ will have up to 90 million subscribers inside its first five years of release. As Disney already has some of the best contents to offer along with others in development, Netflix will be required to promote its products more in the coming years while increasing the number of originals to remain competitive.
Most importantly, Netflix’s decision to increase its subscription prices year hasn’t particularly been popular as a recent study has shown that majority of the subscribers are unhappy with the increments. However, they would still prefer to pay more to continue getting commercial-free contents. With the growing number of competitions along with cheaper alternatives provided by other companies, Netflix might have to reconsider its decision to not include ads in future. For instance, Peter Naylor, head of ad sales at Hulu revealed that 70 percent of the subscribers of the platform choose to pay the $5.99 per month for the ad supported plans rather than the ad-free $11.99 per month plan. Moreover, Disney+ will debut with just $6.99 per month. As Netflix already has some of the most expensive subscription plans, it will be interesting to see if the company indeed ends up incorporating ads.
However, it’s too early to tell as Netflix has plenty of things going well for the company at the moment with several high-quality shows to choose from.