Netflix will have to roll out ads sooner or later, experts say

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Netflix has long shunned advertisements on its platform, but that could soon change.
The popular streaming service may have to consider rolling out ads as it faces increasingly ballooning costs associated to its original programming, executives from NBC and Hulu said at a Cannes Lions panel, according to CNBC.
It comes as Netflix’s original content budget, which is earmarked for producing shows like Stranger Things and Orange Is the New Black, has grown year after year, recently reaching just over $12 billion in 2018.
‘When you have to make more programming that’s not guaranteed to be a hit, you have to spend more money, you have to build your brand, you have to help the consumer discover your stuff,’ said Linda Yaccarino, chairman of advertising sales and client partnerships at NBCUniversal, according to CNBC.
‘The price will go up for the subscription, and it would be logical to mitigate those increases to take ads.’
Netflix has experimented with advertisements in the past.
Last August, it began testing ads for its own original content as users waited for the next episode of the show they were binge-watching to load.
The ads were limited to promoting Netflix’s content, not outside products or shows.
It has also experimented with ad models that challenge the traditional TV commercials consumers are likely used to.
For example, Coca-Cola is re-releasing a limited-edition version of ‘New Coke’ – a product it first released with little success in 1985 – as part of a cross-promotion with Netflix’s upcoming season of Stranger Things.
Streaming platforms like Netflix and others could incorporate ads in ways we can’t even imagine yet, CNBC reported.
‘The future of ad-supported media does not resemble what we’re doing today in terms of ad load or even ad shape,’ said Peter Naylor, Hulu’s head of sales, according to CNBC.
‘It can be interactive advertising or non-intrusive advertising.
‘…When everything’s on demand and served through an IP address, the ad experience is going to dramatically improve,’ he added.
Rivals such as Amazon Prime Video and Hulu haven’t shied away from incorporating advertisements into their platforms.
Prime Video includes trailers for its original shows, while Hulu offers a cheaper, ad-supported subscription option for $5.99 a month.
Historically, Netflix has avoided ads by hiking subscription prices, the latest of which came in 2017.
It seems most Netflix users would rather pay a little more each month than to have to sit through advertisements.
A recent study by DecisionData found that 74 percent of respondents would rather pay more than watch ads, while just 18 percent of people said they’d prefer ads over another price hike, according to Cinema Blend.