With talk in the industry growing about the possibility of Netflix introducing an ad-supported model sometime in the near future, B&T went one-on-one with Havas Media ANZ chief Mike Wilson to get his take on what the streaming giant will do to remain profitable and keep growing…
Do you think Netflix will introduce ads?
I don’t think it is a matter of if or not Netflix will introduce ads, but rather in what form they will monetise the platform through advertising without disrupting viewers’ experience and compromising on their brand values.
How long will it be before Netflix brings featured brand ads to the platform, if it all?
The streaming market is becoming increasingly more clustered as traditional TV and other streaming services will increasingly challenge Netflix’ leadership.
More media companies will shift their content offering to adapt viewers’ behaviour and how they experience their personalised channels.
The potential growth for subscribers is finite and when Netflix’s will be stagnant, perhaps this is when the platform will change its business model to be ad-supported.
To answer the pressure of the competition, Netflix will need to keep investing in content and find new ways of driving profit instead of relying on customer acquisition growth.
Given the backlash from users over Netflix’s recent ad testing, should the company have handled it differently?
Any change to the platform will be unwelcome, as users don’t generally welcome changes and less for revenue generation and profit. Users aren’t willing to compromise on their experience and have any disruption when they binge watch their favourite shows.
There is an assumption that by paying for the service, the platform should be ad-free.
Netflix only used a small segment to trial their ‘recommendations’ ads. The videos were broadcasted between shows and with the option to opt-out and skip the video.
The outcry at Reddit’s Netflix community was heavily relayed in media, as Netflix’s success is closely scrutinised and any potential ad space highly coveted.
What does Netflix need to be mindful of when introducing ads for real so they don’t turn off users?
Netflix audience is younger than traditional TV – they are generally more resistant to advertising than their older peers. They want brands to communicate with them on their own terms.
So, the question is: how will Netflix come up with the least disruptive way to generate revenue from brands, and how it will bring value to user experience?
In the same way it disrupted the industry, Netflix may need to disrupt the creative space to propose innovative paid content and how it can make the ads relevant to most of its users? Perhaps it will offer different subscription models like YouTube does?
Among the challenges ahead for Netflix, user retention will surely be one of them.