Updated on 06-02-2015 by Kyle Wiggers: Added response by CEO Reed Hastings.
In what may either be a simple trial, or a sinister sign of things to come, Netflix is experimenting with advertising before and after its original content. That’s according to Cord Cutter News, which reports that the subscription video service began rolling out post-roll ads on House of Cards, Orange is the New Black, Sense8, and other Netflix-produced series on select streaming devices. The company reportedly began testing with the Xbox One app last week but has since began serving ads on “[more] devices, including Roku and Tivo.”
The ads apparently aren’t appearing in a uniform format or fashion, a possible indication that Netflix is still gauging the response of its 62 million + subscribers. Some users told Cord Cutter News they were able to skip ads, while others said they couldn’t, and some saw briefer ads than others — as short as 20 seconds in length.
Netflix confirmed to Buzzfeed that it’s showing ads “in specific markets,” but only to “show some of [its] original programming,” much like the promotions HBO runs ahead of programming within its Go app. And “[a]s with any Netflix product test, this may never come at all to our members,” a spokesperson said.
Advertising represents an enormous potential cash cow for Netflix as its data and subscriber base grows. The addition of 4.9 million subscribers last quarter drove the company to an impressive 62.3 million users worldwide, and the company’s planning an ambitious expansion to 150 countries by the end of next year. Netflix has a valuable trove of information on those eyeballs — it tracks viewing habits and genre tendencies to tailor recommendations, after all, and has the capability to determine such minutiae as which movie cover colors are more likely to attract viewers.
Ultimately, the test promos could be simply that: a test. CEO Reed Hastings uploaded an image of a dollar sign on his Facebook account today with the caption, “No advertising coming to Netflix. Period. Just adding relevant cool trailers for other Netflix content you are likely to love.” However, they could just as easily prove a harbinger of new streaming tiers sometime down the line. A higher-priced, ad-free offering wouldn’t be unprecedented — Netflix raised the price of its base tier by $1 to $9 last year, and last October started charging new subscribers an additional $12 per month for access to its collection of 4K UHD content.
Whatever Netflix’s intentions, it’s likely to tread lightly. The last major change the company announced — the Quickster debacle that split up its streaming and DVD services into two separate entities — was met with a mass exodus of subscribers, nosediving stock value, and a damaged public image that took years to repair. As alluring as advertising probably is to Netflix executives, they’d no doubt rather avoid a repeat of 2011’s mistakes.