One of the many perks of watching TV shows and movies via a streaming service such as Netflix is the lack of commercials. Many subscribers have openly admitted to preferring Netflix over Hulu because Netflix does not include commercials with their service.
As the Inquisitr reported a few weeks ago, Netflix is currently entertaining the idea of including commercials with their content. The streaming giant, however, has attempted to soften the news to their subscribers by claiming the advertisements are actually just “recommendations” based on what the subscriber is currently watching.
Unsurprisingly, per CNBC, Netflix subscribers did not respond very well to the idea of commercials being added to the streaming giant’s service.
Netflix adds anywhere from 500 to 1,000 pieces of content to their library each year. While the streaming giant has been steadily steering toward original content as contracts with various networks come to an end, Netflix is estimated to spend $8 billion on content this year. Considering how much the streaming giant spends, it makes sense that they would want to try to find a way to curb the cost.
Advertisements and commercials – or recommendations as the streaming giant refers to them – offer a whole new income stream for Netflix to tap into. With this new opportunity, Netflix would be able to charge businesses fees to run commercials and advertisements on their streaming service.
Netflix, however, must weigh out the pros and cons and decide whether the money gained from advertisements is worth the money they will lose from subscribers who choose to drop the service because they don’t like commercials.
Netflix's Billion-Dollar Content Licensing Budget https://t.co/Y3aEB5TS07— TheRealDonSwaGG (@bestnewartist) September 16, 2018
While it might seem like a silly reason to drop the service and some may assume the number of subscribers who cancel their services can’t possibly compare to the number of individuals who have a Netflix subscription, CNBC reports that may not be the case.
According to a recent study, adding advertisements and dropping the prices is not enough to motivate a significant chunk of Netflix subscribers to stay. In fact, most subscribers insist they would rather pay higher prices than be bombarded with commercials.
I’m sorry. But can someone explain to me why Netflix just played a commercial????— Jordyn Galvan (@jordyn_galvan) September 12, 2018
The study revealed that 23 percent of subscribers would likely drop their service if the streaming giant introduces commercials. The study also revealed 41 percent of subscribers would “likely or probably keep their subscription.”
These numbers leave a little more than half of Netflix subscribers in stuck in “maybe.” These subscribers will likely test out the content with commercials and make a judgment call afterward.
As Netflix Rebuffs Commercials, Hulu Offers a Tighter Embrace – Variety https://t.co/xa5N9RsMyn— Julie Pedley (@pedleyjulie) September 15, 2018
If Netflix decides to move forward with commercials, it could backfire as a huge loss in subscribers and a decrease in subscription prices isn’t going to bring in the extra money the streaming giant is hoping for. If the company insists on moving forward with commercials, they may need to take a page out of Hulu’s playbook and offer the option of paying a higher membership fee to nix the commercials.