Netflix Can’t Avoid Ads Forever, Say Hulu and NBC Execs

Tsing

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One of Netflix's biggest perks is its ad-free experience, but competitors don't believe that can last. NBCUniversal and Hulu executives say it will eventually require a new revenue stream to keep up with the rising costs of new programming.

They may be right. In October, Netflix raised $2 billion in debt. Another $2 billion followed in April, bringing the company's debt to around $12.3 billion.

Netflix will probably continue raising the prices of its subscriptions for the time being, but a tipping point seems inevitable.

Just how an ad-supported Netflix might look is unknown. Theoretically, Netflix could borrow a page from the playbook of Hulu (and soon AT&T’s WarnerMedia) and offer a version of its subscription-based service for a discount with ads. Or Netflix could copy the Spotify model and have a free version with ads as opposed to a subscription service that may come with additional benefits.

It’s also possible Netflix could incorporate ads in a way that doesn’t mirror the traditional model of TV commercials. Netflix has already experimented with product placement, such as Coca-Cola’s New Coke rerelease on its hit show “Stranger Things.” Future integration of advertisement is likely to come in new ways that haven’t been created yet, said Naylor.
 
If they do turn to ads I'll be the first one gone. It's kept me away from Hulu and other network-sponsored online services.

I honestly haven't really minded the subscription increases. It's not exorbitant... yet. So long as they keep it ad-free.
 
We spend a lot of time watching things on Netflix but even more time looking for things to watch. I think their approach of throwing something at every wall they can find to see what sticks has to be attributing a lot to their debt. The amount of 'originals' we actually watch to completion has to be in the single digit percentages. Another price increase will be a minor annoyance but ads will be a tipping point and with Disney Streaming right around the corner it'd be risky to tempt people to switch. That could be a mass exodus.
 
I'd pay near cable TV prices to keep Netflix ad free. I've got 4 users and they offer okay 4k content. As long as they have interesting shows keep it ad free.
 
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