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

[Tsing]

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.

 

[Brian_B]

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.

 

[Peter_Brosdahl]

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.

 

[JosiahBradley]

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.