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Netflix Could Lose Almost a Quarter of Its Subscribers If It Started Running Ads, Study Shows (cnbc.com) 172

Posted by BeauHD from the don't-you-dare-do-it dept.
According to a recent Hub Entertainment Research survey, twenty-three percent of respondents said they would definitely or probably drop their Netflix subscription if it began running ads at its current price point or a dollar cheaper. "That percentage would represent a loss of nearly 14 million subscribers from Netflix's 60 million paid subscribers in the U.S," reports CNBC. From the report: Respondents were more forgiving of the ads if Netflix dropped prices. Only 14% of respondents said they would definitely or probably drop their subscription if it were $2 cheaper than they currently pay. That number fell to 12% at a $3 discount. The study's findings were based on a survey of 1,765 U.S. TV consumers between ages 16 and 74 who watch at least one hour of television a week and have broadband in the home. The Hub study comes as advertising insiders speculate Netflix will make advertising a core part of its business someday. At a panel during IAB's Digital Content NewFronts in April, Joshua Lowcock of media agency UM said he "can't imagine a world where Netflix will be ad-free forever."
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Netflix Could Lose Almost a Quarter of Its Subscribers If It Started Running Ads, Study Shows More

Netflix Could Lose Almost a Quarter of Its Subscribers If It Started Running Ads, Study Shows

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  • Boiling the Frog with an Occasional Ice Cube (Score:5, Insightful)

    by Kunedog ( 1033226 ) on Saturday July 06, 2019 @01:39AM (#58880808)

    Respondents were more forgiving of the ads if Netflix dropped prices.

    Respondents are naive.

    • Researchers performing survey were also naive. regardless of percentage, ads would cost some subscribers to netflix and they would need to rise prices in order to compensate for the lost users, not the other way around.
      I am just a (ex-)user and have never sold streaming services in a professional capacity so my observation based on my experience as a user and PPV seller to hotels, and in short netflix seems to be doomed. Content providers are entering streaming market, netflix's library (both their own pr

      • Researchers performing survey were also naive. regardless of percentage, ads would cost some subscribers to netflix and they would need to rise prices in order to compensate for the lost users, not the other way around.

        It's almost as if you don't know that ads can generate extra revenue.

        • Nope I haven't forget the fact that ads also generate revenue. There are two problems.
          I do not want to get into long lecture type ranting, but in short, online ads are not reliable revenue streams, you need click records or some percent of the length of ad to be watched by user without backing out, thus they tend to oscillate and different than subscriber fees which is paid regularly as long as subscriber does not get irritated enough to cancel service (and ads are the greatest irritator), this is one.
          An
          • Hell, I do not want to rant but I remember another anecdote. Last year I changed my GSM operator, because my old operator changed my plan with a lower cost higher capacity one. Nice isn't it, at the and I was their customer for 20+ years... But that made me to check prices on the market and I switched to a package, in their main competitor with one quarter of the monthly fee of my old operator. Even my business partner, switched five lines they use in their family, after seeing price I get.

        • Re: (Score:2)

          by rtb61 ( 674572 )

          You can not generate extra revenue when people drop the service. I would drop it in a heart beat, gone with a second thought. Want to scream your ad shite at me, well, you can go fuck right off. That was last millenniums bullshit and has no space in modern life.

          The reality, the psychopathic cunts requiring mass consumption for the bloated profits, the ability to sell corporate lies, are all feeling the pinch, as the psychological pressure to buy falls off with less screaming advertisement exposure in the m

      • >"I had dropped my subscription some months ago, because I could not find anything to watch in their library. And yes; Their UI is terrible and was getting worst by the day."

        So did I, for the exact same two reasons. Nothing of interest (to me) to watch anymore and I hate, hate, hate their UI. I will resume the subscription when new shows I like are renewed, but paying month after month for something I barely use is nonsense.

        As for ads, I will not watch or listen to anything with forced ads, ever. Does

        • I agree, I'm not going back to watching ads.

          I could however see value in offering discounts for watching ads. A calculation I did above suggests that the revenue from 13 minutes of ads per day might be enough to fully replace the $13 monthly Standard plan. (At an ad rate of 3 cents per minute, per viewer - somewhere in the general ballpark of local TV ad rates)

          With the average Netflix usage rate of 10 hours per week, that would require about the same 15% ad ratio as for broadcast TV. Might be a good place

    • That seems like a poor use of this word. It isn't naive to make a trade off. It can be called many things, mercenary or frugal perhaps chief among them, and I would never make the same decision, but I can actually understand why people would do it.

  • And then (Score:4, Insightful)

    by hcs_$reboot ( 1536101 ) on Saturday July 06, 2019 @01:39AM (#58880810)
    they're back... just a matter of time before people get used to ads on netflix.

    • Maybe some people. The moment I see an ad on Netflix, I will immediately cancel. Prime came very, very close by showing "ads" for its other shows. I just have little tolerance for that sort of thing any more.

      • Re: (Score:2)

        by DeVilla ( 4563 )

        What do you mean "came very, very close"? In their Roku app at least, they have ads before (almost) every video. I called them like I did Hulu when Hulu started showing ads before videos on Roku. Unlike Hulu, Amazon has no option to turn them off. So Amazon is on the cutting block.

        The only reason they aren't gone yet is my wife uses Prime for shipping. They saved us a few times when we needed something on shorrt notice, but they are getting worse as that too. I believe she'll be fed up soon.

  • ... people spreading rumors like this are evil.

    Stay strong, Netflix. You don't have to be who they want you to be.

  • Insidious Ad-Surveillance Apologism (Score:5, Interesting)

    by mutantSushi ( 950662 ) on Saturday July 06, 2019 @01:46AM (#58880828)

    "can't imagine a world where Netflix will be ad-free forever."

    Gee, that couldn't be like HBO which has existed ~40 years without ads. Because people pay for product they like. Making ads un-necessary.

    But admitting this model isn't necessary isn't convenient, because pretending it is inevitable means tough questions never need to be asked.
    Although for that matter nobody asks why regular old fashioned non tracking ads aren't possible. Well they are, and do continue to exist.
    But asking why revenue from those isn't good enough again poses uncomfortable questions to the datamining tracking ad-surveillance industry.
    I saw Firefox's ad-free media subscription plan, which sounds great and the sort of thing people would sign up for to support content they like.
    I don't expect them to actually work with media that interests me (which mostly doesn't have ads anyways) but surely would apply for many.

    • Re:Insidious Ad-Surveillance Apologism (Score:5, Insightful)

      by dwywit ( 1109409 ) on Saturday July 06, 2019 @02:53AM (#58880950)

      Yeah.

      Joshua Lowcock of media agency UM said he "can't imagine a world where Netflix will be ad-free forever."

      Imagine that. An advertising/marketing agency with its eyes on a big pool of people to whom they could be pushing their obnoxious material.

      Tell you what, Netflix, I will gladly pay you $2/month more to stay ad-free. Your content, both original and licenced, is worth it. I'm not interested in Disney, so that's no loss. Some of the Fox stuff I might miss, but that's available elsewhere should I develop a desire to watch it.

    • HBO is a bad example as that has always existed as a premium service. I wonder what the internet would be like if almost every site had a paywall

    • Gee, that couldn't be like HBO which has existed ~40 years without ads.

      When did that happen? HBO was ad free in the 70's for a short while, then became ad-infested just like broadcast TV. I haven't had HBO since then. Did that actually change?

    • Re: (Score:1)

      by Anonymous Coward

      They've almost doubled the price of Netflix in a handful of years. That alone has me on the verge of getting rid of them.

      Especially since . . .

      Their original content has become 90% crap rather than the almost guarantee of netflix original stuff being amazing.

      They're getting rid of a ton of their licensed content, which is the main draw of hte site in the firs tplace.

      They're getting a little too "woke", censoring smoking (fucking really?) and going down all these obnoxious routes that would be fine if they w

  • 77% would keep their sub ??? (Score:5, Informative)

    by aepervius ( 535155 ) on Saturday July 06, 2019 @01:50AM (#58880844)
    Woot, this is an incredibly sad number accepting ads for a few dollar off. Count me in the few percent which will drop any subscription (no whatever which) if it add ads. Look I PAY money *any amount* then I see no ads. If I see ads, then it better be free. That is my bottom line.

    • Re: (Score:3)

      by dgatwood ( 11270 )

      Yeah. I'm surprised it isn't more like 90%.

      That said, if they offered a low-cost subscription for $2 a month with ads, I could see that expanding their market share somewhat.

      Of course, at about half of all U.S. households already, their numbers over here can only increase so much (short of the lower-cost Netflix tier somehow inadvertently encouraging young people to watch Netflix with other young people in ways that lead to creating new households), so I'm pretty sure there's no strong justification for s

    • ...including the "would probably drop". Meaning Netflix would probably lose only 5% in the long run.

    • Re:77% would keep their sub ??? (Score:4, Insightful)

      by swillden ( 191260 ) <shawn-ds@willden.org> on Saturday July 06, 2019 @09:14AM (#58881682) Journal

      Look I PAY money *any amount* then I see no ads. If I see ads, then it better be free.

      That's a very millennial position.

      The blended model -- where media is supported partly by ads and partly by subscription or newsstand fees -- has been the norm since the very beginning of mass media, from when the only thing that existed was print. The notion of media supported only by advertising was an innovation of radio and TV, but it only went that way because collecting subscription fees was impossible... at least until it became practical to encrypt transmissions, at which point it became pretty much the norm again.

      You're certainly entitled to your opinion, but it really doesn't make much sense to take such an absolutist position. A given medium has certain costs (including a profit margin). Those costs can be funded purely by advertising, but in many cases this means that a lot of ads have to be displayed (good ad targeting can generate higher revenues from fewer ads, though), or they can be funded purely by subscription fees, though in many cases that means the subscription fees have to be high. A blended model is a compromise that works for many contexts and people.

      Netflix is in the position of having offered a service that is not sustainable. They were able to offer cheap, ad-free streaming for a few years because the content owners were fixated on cable service, and didn't realize that this streaming thing was going to be important, and so licensed their libraries to Netflix at low rates. Netflix's success made them take notice, so they began demanding much higher prices -- or refusing to license to Netflix at all, in favor of setting up their own streaming services (which suck, but that's a topic for another post). Netflix has tried to fight back by creating its own content, and been quite successful at producing content that people are willing to pay for, but that doesn't really solve the problem because a Netflix stream with nothing but Netflix-produced content isn't sufficiently-appealing for people to pay Netflix's current prices. Lowering their prices to a level where people will pay only for Netflix-produced content won't work because that content is expensive to make. Raising their prices to generate the revenues needed to continue licensing a broad array of other content while still producing their own has been their approach so far, but they will likely need to raise them further, and it seems unlikely that their subscribers are willing to pay much more.

      So, it makes sense for them to look into a blended model, to keep their prices at the current level, or even lower, while generating enough advertising revenue to pay the higher content licensing fees.

      • Re:77% would keep their sub ??? (Score:5, Insightful)

        by Bite The Pillow ( 3087109 ) on Saturday July 06, 2019 @02:21PM (#58882770)

        I read all your words. Still, if I pay money it's free. You want advertising dollars? I go somewhere else.

        Here's why. Advertising to the masses is expensive. Targeted adverts cost less. Chasing the profit in a blended model inevitably results in at least minimal tracking, and even if they promise zero tracking I'm still the product.

        When I'm the product, I get the service for free. This isn't Millennial entitlement, this is Gen X understanding the internet business model.

        • Okay, but expect to pay a lot more than you have been for ad-free media. Triple, at least, probably more. Most likely it's going to take the form of having to subscribe to a half-dozen different services, each at $10 per month, in order to get what you have been used to getting from Netflix.

          • Re: (Score:1)

            by Anonymous Coward

            I'm Ok with paying more for ad-free media. I have a job, and it happens that my job pays more minimum wage. Watching ads pays much less than minimum wage and is less enjoyable to me than my current job anyway, so I'd much rather trade my time to my employer in exchange for money and use that money to pay for content, than trade my time to a scumbag ad company who then pays pennies for content that they then show to me.

            I also prefer eliminating the moral hazard that is advertisers not wanting to be associate

    • Look I PAY money *any amount* then I see no ads. If I see ads, then it better be free.

      Bingo.

      I feel the same way and I suspect that the vast majority of other people do as well. If I'm paying for it, then I don't want to see any ads, PERIOD, the end.

      I don't even like the promos for other shows they want me to watch, but I'm willing to ignore those. They better be skippable, though. The thing is that I'm already watching stuff on your service, so FFS, stop marketing to me!

      Similarly, I feel the same way about the in-store ads coming over the sound system at Safeway or Albertsons or Fred Meyer w

    • I expect that if they ever decide to get ads they'll keep an ad-free tier. If so, that's the best of both worlds IMO

    • I think people might take the savings at first, thinking "how bad can it be". But, during some stupid and annoying ad break, they'll start downloading an ad-free version from the pirate bay. Soon after, they'll realize they don't actually need Netflix to use the pirate bay.

      Users pay for the convenience of streaming services compared to piracy. Ads would seriously tilt the scales in favor of piracy (again).

    • Re: (Score:2)

      by dohzer ( 867770 )

      Well sure, but then again, people are willing to *pay* for the honour of being a walking-billboard for clothing brands and others. It's sad.

  • Yep. I'd be one of them to leave. (Score:5, Insightful)

    by jklappenbach ( 824031 ) on Saturday July 06, 2019 @01:54AM (#58880852) Journal
    There's no way that I'm going to pay for a subscription and then still be subjected to ads. I'd be happy to pay incrementally more for premium content. But my family has largely cut advertising, unless actively sought, out of our lives. We're not going back.

  • Hey, that's no moon... (Score:1)

    by Anonymous Coward

    The House of Mouse is coming and its going to hurt a lot of streaming services. If Netflix wants to toy around with advertising, they shouldn't be surprised when there isn't a Netflix anymore.

    • The House of Mouse is coming and its going to hurt a lot of streaming services. If Netflix wants to toy around with advertising, they shouldn't be surprised when there isn't a Netflix anymore.

      If you want to see what Disney does to a service, look at ESPN. What was once a Sports multi-media company has turned into a mess of woken quasi-sports gossip talk, turning some sports stars into pop culture hearties, like turning the NFL quarterback position into Taylor Swift or Beyonce type pop stars, and turrning the NBA into a gossip column that would make Hedda Hopper proud.

      Oh - and I timed espn on my radio. 50 percent ads.

  • I'd be out the door in a second flat. These days feels like I only keep it around out of inertia.

    • I'd be out the door in a second flat. These days feels like I only keep it around out of inertia.

      Same for me, more or less. Inertia, plus not wanting to argue about it with my wife - who hasn't actually watched Netflix in probably a year or more, but still wants it because there's "some shows she likes"..

  • the execs are making the bean counters run the numbers to see if its worthwhile.

  • who watch at least one hour of television a week

    Would anyone who watches so little TV actually have a subscription?
    TBF, the text doesn't actually say that the 1765 people they questioned were, in fact, Netflix subscribers (I doubt that many or any 16 years-olds pay for their own Netflix subscription). So why ask people who don't have it, whether or when they would cancel it?

    This survey looks pretty flawed. And a company would have to be extremely foolish to base its business decisions on what some random people say rather than what its actual customer

  • they chose to lower the content quality instead.

  • It's not like they're not already making plenty of that sweet Product Placement money!

  • Hulu (Score:1)

    by zvar ( 158636 )

    Ads are the reason I will not use Hulu. I refuse t pay to have advertisements blasted at me, usually unskippable ones at that.

  • How about bitcoin mining going on in the background. Undermines the whole ad model.
  • A no charge tier with ads could be included. I'll keep mine ad free, or I'll get the videos elsewhere without ads. Our library still offers DVD's and Blu-Rays.

  • To be honest, it really would depend on how they handle it - right now, we get previews / starts of shows whilst browsing (personally, I find that infuriating - I don't want to be bombarded with the actual content while I'm just flicking through deciding what to watch).

    If they replaced that with adverts, but then when you select something to watch it immediately went into whatever it was you selected, I might be OK with that.

    But if they put adverts in the way of content - ahead of the show, and even worse,

  • I could not imagine going back to TV with adverts, after a decade of avoiding them.
    Before streaming became 'mainstream' (pun not intended), there were other methods to avoid adverts.

    There was a time when I didn't mind adverts, because at least 20% of them were clever, humorous, impressive.
    Those days have long gone, now it's the lowest common denominator. On the rare occasion I'm subjected to them it reminds me just how terrible they are - how offensive to the senses.

    If streaming services are not careful, wi

  • 1. Don't run ads.
    2. Stop paying for tv series "owned" by other brands.
    3. Make more content.
    4. Sell more of your own content.
    • Comment removed based on user account deletion

      • Making their own content is the expensive part.. Buying someone else's is far far cheaper. When you make your own, you have to pay 100% of the development cost. When you buy someone else's, you only have to pay what they charge, and it's not going to be 100% of the development cost.

        If Netflix switched to 100% their own content, your subscription would be way fucking higher.

        I'd watch tons of the foreign language content if they dubbed it in English. That has to be cheaper than making your own stuff.

  • Plan:
    - drop prices
    - add ads
    - wait a short period (1 year, maybe)
    - increase prices

    People will still leave, but not as many as if they just added ads. And since users are now used to ads, price increases can continue as normal, as well as increasing the amount of ads.

    Before long, Netflix is as bad a cable. And still with a crappy library.

    • >"Before long, Netflix is as bad a cable. And still with a crappy library."

      Three letters: D V R (Or 4: T I V O).

      Cable (or broadcast) can never be as bad as Netflix with forced ads, because DVRs make it possible to skip or zoom through ads. You can't do that with a streaming service. Heck, it is a pain to skip/zoom through (or back through) ANYTHING with streaming.

  • Comment removed based on user account deletion

  • So every time Jennifer Lawrence shows her tits will be time to pay Amazon more money!!!

    Just a quick ad. Then another quick ad.. then you surely wont mind another quick ad you racccis!!!

  • From free to the most I would pay, if it has ads, I'm out.

  • This study and the consumer behavior will be moot once all the streaming services silently collude and all start inserting ads. Once that happens the consumer will have no alternative and will do what they aways do: grunt and take what they are given to take.

    It will happen. The siren call of so much additional income for minimal additional effort is just too strong.
    When all this comes to pass and between the typical 6 - 10 subscriptions the average person will have due to content lock in, and *after*

  • What Netflix has besides inertia is competence, and no ads.

    We just tried a week's trial of the Showtime app. It was the worst streaming experience I've had since Real. They show you a long, unskippable commercial for one of their shit shows before you get to watch what you wanted, and they signed us out automatically at least twice a day - once, literally while we were watching an episode.

    YouTube also is quite inept of late. They show one ad at the beginning of monetized content, and then occasionally break

  • The only way content keeps its value is to enforce scarcity. If content is available everywhere, it will be worth less. This is what leads to exclusivity deals, and technical measures to prevent piracy.

    That said, most of what Netflix offers is garbage in my opinion and is essentially worthless to me. If I want to watch something, I mostly watch individually produced content on Youtube.

  • The day Netflix makes me watch a commercial is the day that I terminate my membership. Netflix, ask me to pay double what I am currently paying, and I might stay. Force me to watch commercials, and it is bye-bye forever.

  • Netflix is in for some hard times ahead even without ads, they'd be a fool to consider them. I would absolutely bail if they started running ads. I might be bailing soon anyway given the price hike and disney+ coming out. I'll admit some of their content is compelling, but not enough for me to want to keep paying the cash.

  • Here for the first time i am hearing that news. Its quite surprising mcdvoice [mcdvoice.dev]

  • Losing 25% of it's sub revenue might be made up by the money they get from advertisements.

    Anybody done the math on that?

  • Comment removed based on user account deletion
  • If someone pays a premium for content they do so with the expectation of not being bombarded with ads. That doesn't mean Netflix won't do it. Maybe they'll decide they can make more money from ads than they'll lose from cancellations. Maybe they'll do a bit of frog boiling, at first inflicting ads on the lower pay tier, or offering 4K content to the lower pay tier if they accept ads. It's still a terrible idea.

  • Why do media companies think they can double dip? You can be either HBO or NBC. You can NOT be both. HBO can't show commercials and NBC can't charge money.

  • Don't care what the price is, I see an ad, subscription is cancelled.
    The only reason I subscribe to Netflix it is to stay legit.
    I have no qualms about going back to torrents. No qualms at all.

  • Netflix has already lowered the quality of their film & TV offerings (according to a news story published in the last few years) and in the interview, their C-level spokesperson, said it made no difference in the membership numbers. Then they raised prices. So, to add to all their shenanigans, they want the subscribers to have to watch ads?

    Why the hell do they ignore that a/the major that broadcast TV watchers switching to cable and then to streaming channels? Because of the increase in ads and r

  • I might tolerate 1 or 2 ads before my show starts. I have a mute button, but that would still piss me off.

    If they started interrupting my show in the middle for an ad, then I will drop it like a hot rock.

    But what would I turn to instead? Perhaps HBO, or Amazon Video, but piracy is also an option although I haven't done that since I cut the cord before the last half-season of Breaking Bad. Did Walter White think I really wasn't going to torrent the series finale? I think I torrented the last 6 episodes of

  • I can stomach the idea of them wanting to show ads if they start allowing "free" accounts, like Hulu - but only for those accounts. If I'm paying for a premium service I damn well do not want to see ads, the ones for other shows that cut into the credits of any movie now are annoying enough.

    I'm not sure how well I'd stomach them offering an "Ad supported" price tier though. They start doing something like that, it might make it feel like they raised prices on the premium tiers just to make room for the

  • No! (Score:2)

    by sad_ ( 7868 )

    who are these fools that think it is OK? more then 75% have no problem with this, plain crazy.
    if there is one reason i like netflix so much is that they have no ads, if they ever get ads i will look for another streaming service without.
    the sad thing ofcourse is that the majority would not leave AND netflix will get extra income from ads, the people leaving will hardly make a dent in their profits. this means ads will be coming for sure, they have nothing to lose (except subscriptions that don't matter).

    i w

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