Netflix May Not Be Ad-Free Forever, According To Industry Experts

Speaking during a panel yesterday at Interactive Ad Bureau’s (IAB) Digital Content NewFronts, several panelists in both the streaming and advertising industries suggested that Netflix would not be able to sustain its ad-free model forever and that eventually it would be forced to succumb to traditional advertising. Asked about whether Netflix would stay ad-free, for instance, Tara Walpert Levy — YouTube and Google’s VP of Agency and Media Solutions — suggested that it’s unlikely. “Well, that’s not what their recruiters say. They’re going to need growth. Eventually, they’re going to need more growth.”

Joshua Lowcock of media agency UM added, “Netflix is ad-free now. I can’t imagine a world where Netflix will be ad-free forever. If you look at their content costs … that’s where addressable advertising and new ad formats will come in.” Meanwhile JP Morgan Chase CMO Kristin Lemkau suggested that consumers would be open to an ad-supported Netflix.

In fact, it almost seems inevitable. With a number of other streaming services coming online in the next year — like Disney+, Apple, Time Warner, and AT&T, in addition to traditional cable (and streaming cable) services — the desire among consumers to keep costs down while also maintaining access to as much content as possible may eventually force Netflix to provide ad-supported subscriptions, like the ones that Hulu offers (ad-supported Hulu costs $5.99, while their ad-free plan cost $11.99).

Netflix is still a bargain at $12.99 a month, which is $2 less than HBO, while HBO only provides a fraction of the content. For Netflix to continue to grow while also providing enough content to compete with other streaming services, either subscriptions will eventually have to rise significantly or Netflix will have to offer an alternative options for those who are willing to sit through commercials in order to save a few bucks each month, especially given the increasing costs of all the other combined platforms.

As it stands, it feels like there’s probably a large percentage of Americans who would simply be willing to pay $10 a month and sit through commercials just to watch Friends and The Office reruns.