According to the website Cord Cutter News, Netflix, Inc. (NASDAQ:NFLX) is including ads for its proprietary programming content before and after shows. A spokesperson for Netflix clarified that the ads were just trailers for Netflix original content.
As per the organization, hundreds of possible enhancements to their service are evaluated every year. Most are dropped after the trial. Streaming TV provider Netflix earlier was devoid of advertisements. It generated revenue through monthly subscription charges. The firm boasts of around 60 million subscribers.
Cutter News reported that subscribers who access Netflix through Xbox One gaming consoles, Tivo DVRs and other such devices were receiving the trailers. Also for certain individuals, the trailers were shown prior to and after a show commences.
The Netflix representative reiterated that the organization will not entertain third party advertising. Netflix has the practice of playing around with its user interface. It implements changes that motivate people to watch more of its programs and routes films and TV programs that it perceives as preferred by particular subscribers.
The strategy it follows is to test out new or minor changes on a subset of subscribers initially. If it is popular, then it extends the feature to all its subscribers.
Netflix is following its peers such as HBO or Showtime, who run trailers to encourage customers to renew their subscriptions. It has already spent a considerable amount of money in producing original programming to stand out from rival organizations. The company’s objective is to attract users to its new programming content. Some industry experts maintain that Netflix needs advertising to continue to be profitable. In the eventuality of Netflix including third party advertising, it would immensely profit from it.
Many existing subscribers prefer Netflix because of the absence of advertisements. For Netflix to generate extra revenue, advertisement sales are a more reliable model than generating original content to attract new customers. The organization is presently adamant that it will not introduce third-party ads. Even if Netflix plans to introduce third-party ads in the future, it needs to factor in the possibility of driving away committed customers.