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Netflix Thinks It Could Earn $1B by Interrupting Your Binge With Ads

Sean Dennison
  • Netflix is <a
    href="https://www.gobankingrates.com/making-money/business/tv-shows-charge-commercial-time/?utm_campaign=662073&utm_source=yahoo.com&utm_content=1">testing ads between episodes.
  • In a statement, the company said it is doing so to <a
    href="https://www.gobankingrates.com/video/best-shows-about-money-on-netflix-hulu-amazon/?utm_campaign=662073&utm_source=yahoo.com&utm_content=2">help members discover content they might enjoy watching.
  • It was reported in July 2018 that Netflix <a
    href="https://www.gobankingrates.com/investing/stocks/ups-downs-netflixs-stock-company-turns-20/?utm_campaign=662073&utm_source=yahoo.com&utm_content=3">missed its subscriber growth projections.

If you think of <a
href="https://www.gobankingrates.com/making-money/business/how-much-is-netflix-worth/?utm_campaign=662073&utm_source=yahoo.com&utm_content=4">Netflix’s streaming service as an actual stream, it recently added some sediment in the form of ads between episodes. Previously, episodes have played sequentially, with only a static preview if users let the end credits roll.

Now, it looks like Netflix really wants you to watch its flicks as the ads that have been added mostly include <a
href="https://www.gobankingrates.com/making-money/business/apple-oprah-deal-tv-streaming/?utm_campaign=662073&utm_source=yahoo.com&utm_content=5">original content.

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Users began reporting the ad additions in mid-August. Although the negative outcry initially was limited to Reddit, the story has since been picked up by major outlets. However, users don’t have to worry about continued interruptions — yet. Netflix is only testing the waters as the company said in a statement to technology outlet Ars Technica, “We are testing whether surfacing recommendations between episodes helps members discover stories they will enjoy faster.” Netflix has also noted the backlash from users and offers a way to opt out of participating in testing on its website.

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If the initial reception has been any indication, Netflix might want to reconsider continued testing. Reelgood, an online streaming guide, reported in 2016 that about three-quarters of Netflix subscribers would sooner cancel their subscription than be subjected to ads. Netflix already incorporates video previews in the browsing experience, but implementing ads between episodes is a more direct strategy that inserts the company’s testing initiative right between the viewer and the viewing experience. Netflix CEO Reed Hastings wrote back in 2015 that there would be “No advertising coming onto Netflix,” only “relevant cool trailers for other Netflix content you are likely to love.” 

Check Out: <a
href="https://www.gobankingrates.com/making-money/business/how-companies-keep-creating-own-success/?utm_campaign=662073&utm_source=yahoo.com&utm_content=8">Learn How These Companies Keep Creating Their Own Successes

Since Netflix’s official statement only notes user experience without any financial incentive, it’s hard to quantify what numbers Netflix hopes to hit should its ad strategy become the new norm. It might be attempting to emulate the numbers of streaming rival Hulu, which reported ad revenue that crossed the $1 billion mark in 2017 while expanding its subscriber base. Netflix’s stock dropped in July 2018 after it reported missing subscriber growth projections, but both revenue and profit jumped between 2016 and 2017.

David Wells, the company’s chief financial officer — who plans to step down from the position, pending a new successor — also noted in a July earnings interview that no drastic changes have been made to their long-term business strategy. Netflix previously raised its subscriptions fees back in 2017.

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This article originally appeared on <a
href="http://www.gobankingrates.com" target="_blank">GOBankingRates.com: <a
href="https://www.gobankingrates.com/making-money/business/netflix-ads-between-episodes-earn-billion/?utm_campaign=662073&utm_source=yahoo.com&utm_content=13" target="_blank">Netflix Thinks It Could Earn $1B by Interrupting Your Binge With Ads