Netflix has long been one of the last bastions of ad-free content streaming and has resisted the notion that a service needs an AVOD plan to succeed. Obviously, it’s been the top dog in streaming for quite some time, so remaining ad-free must be doing something for them, right? Regardless, one would have to live under a rock to not realize the power of ad-supported content.
Omdia research director Maria Rua Aguete said that 2021 will be the year of AVOD, citing massive gains in ad rates to the tune of $40 billion in revenue generated in 2020 (versus $32 billion generated by SVOD services.) Also, Hulu, Amazon Prime Video, Peacock, Paramount+, and soon HBO Max, all have ad-supported tiers.
Knowing the sheer amount of revenue that comes with ad-supported subscription tiers, would Netflix ever consider adding ads to their service? If they did, what would ‘Netflix with ads’ look like?
When Would Netflix Play Ads?
For a service that’s never had ads, adding them post-haste would seem to be problematic. After all, movies aren’t designed for ad breaks and neither are Netflix’s original shows. So when would Netflix play ads? No matter what, we imagine you’d get an ad break upon starting a show or movie. Hulu and Amazon Prime Video do this, and it seems to be common practice at this point.
For movies, we imagine ad breaks would come at fixed times during the course of a film. Netflix could also opt to place breaks in strategically, much like edited-for-TV movies end up doing. They could do the same for original shows that don’t have pre-determined fade-outs like most broadcasted shows do.
Obviously, third-party properties that aired on traditional TV come with fade-outs — all Netflix would have to do is make sure their ad breaks line up with the show’s. Amazon Prime Video hasn’t quite mastered this, leading to jarring ad breaks interrupting tense moments in shows, then returning to a faded image as the show continues on.
Would Netflix Offer a Free or Paid Ad-Supported Tier?
There’s a case for either a free or paid ad-supported tier for Netflix. Some services, like Peacock, offer both — but adding TWO new tiers could present problems for subscribers who are used to Netflix’s simple “pay $X and get service” business method. But there are benefits to both.
A free AVOD tier could hook viewers who are wary of Netflix’s higher monthly fee at first glance, but could become hooked on the platform’s shows and movies from here. A “Netflix Channels” option similar to what services like Pluto TV do, where shows are played randomly on a 24-hour loop, could be the play here. We imagine dedicated streams of shows like “Ozark,” “Big Mouth,” or Netflix’s massive library of documentaries and anime, backed by ads.
A paid ad-tier would give subscribers another option while maintaining the exclusivity of the paywall. While users may begrudgingly pay for Netflix on a monthly basis, a cheaper option with ads could do wonders for those with tighter budgets. Netflix could also offer the less expensive option as a way to keep users around, especially if they decide to hike prices again.
While Netflix has said time and time again they wouldn’t put ads on their platform, “never say never” rings true when it comes to business. If it makes sense for Netflix, its partners, and the consumer to add ads, they’ll do it. Hopefully they’ll do it right, but if not, we’re sure the internet will let them know to fix it.