Netflix dismisses fears that it is introducing adverts
James R | On 02, Jun 2015
No, Netflix is not introducing adverts, the streaming giant assured the public again today, after reports circulating in the media that ads were on the way to the service.
The fear spread following reports from Cord Cutters News that the site was showing trailers ahead of programmes. These followed earlier reports from users watching Netflix through Xbox One consoles that trailers were being shown after shows ended.
The surprise was also experienced by users on other devices, including Roku and Tivo boxes.
While YouTube is known for its pre-roll adverts, though, Netflix does not rely on such content for its income: it is a subscription-based service, which has won over customer loyalty, in part, thanks to its ad-free experience.
Indeed, Netflix has always insisted that it will not run conventional adverts in front of, or after, streams. Banners on menus are also not on the cards.
“Every time [the discussion comes up], we shoot it down,” Steve Swasey, VP of corporate communications told Fast Company as far back as 2011.
The company has struggled to generate a profit, though, as it pumps so much of its income into acquiring and producing new content, as well as expanding into new markets – international growth that is designed to, ultimately, win over new subscribers. (The company enjoyed over $1 billion in revenue in the first three months of 2015, but net income of under $30 million.)
Rather than introduce adverts, the company has already shown it is willing to consider alternative methods to boost revenue, raising subscription fees last year from £5.99 to £6.99 for new customers.
In 2014, CEO Reed Hastings confirmed alongside a financial report that Netflix has “no plans to go towards advertising-based models”.
“Our brand, at least over the next couple of years, and at this point, really stands for that commercial-free experience that we have where the consumer’s in control of the experience. They get to watch when they want. They get to pause it when they want. They can play it when they want, and watch it how and where they want. So it’s fundamental to that control orientation that we don’t cram advertisements down people’s throats. So I really don’t see that.”
Despite this consistent message, though, the appearance of trailers began to spook some this week. Indeed, Sir Martin Sorrell, chief executive of marketing company WPP, recently claimed that Netflix would have to consider adverts eventually to become financially sustainable. Such a move, though, would deter its growing army of global members, which is why it is extremely unlikely to ever occur: if anything, subscription fees would climb another £1.
The videos, meanwhile, are specifically limited to Netflix’s own content: a practice that is already employed by HBO and Sky’s NOW to pitch original programming to viewers.
“We are not planning to test or implement third-party advertising on the Netflix service,” confirmed Netflix in a statement to multiple publications.
“For some time, we’ve teased Netflix originals with short trailers after a member finishes watching a show. Some members in a limited test now are seeing teases before a show begins.”
Nonetheless, there is no guarantee that these trailers will be coming to a streaming service near you soon.
“We test hundreds of potential improvements to the service every year,” the company’s spokesperson added. “Many never extend beyond that.”
Just in case anyone was still confused by the headlines blasted out by the media, Hastings took to Facebook to comment: “No advertising coming onto Netflix. Period.”