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The old-timers are chasing Netflix

    It’s a question almost as old as Netflix: How long can we have the world’s favorite streaming video service without advertising?

    For years, when Netflix executives were asked if the company could ever run ads like conventional TV, their answer was a version of no. However, people closely watching Netflix last month discovered a subtle but meaningful change in the response of the company’s chief financial officer, who said, “Never say never.”

    Its executive director, Spencer Neumann, said the company had no plans for ads, but his comments renewed arguments from those in entertainment and finance about whether Netflix should or should add commercials.

    Alongside apps like YouTube and Facebook, Netflix is ​​an undisputed leader as the world’s leisure habits are changing. But streaming is a tough business, period, and the ability to add commercials shows that even the star of the industry is finding it hard to replicate its past success.

    Netflix is ​​a bit of an oddball for earning revenue purely from monthly fees paid by its customers. Conventional cable TV, some streaming video services, and other companies, including The New York Times, combine subscriptions and advertising.

    I want us to consider two questions: First, does it help us if companies that make money selling products add more paid commercials to the mix, like Amazon, Apple, and Uber do? And second, will the pressures of adult life force them to change in ways we don’t like, if the technology services we love mature from young children to leaders in their fields?

    Let me step back and provide some context as to why the long-standing question of whether Netflix should add commercials is resurfacing.

    For a long time, Netflix continued to find new customers as it pursued its mission to become TV for the world. But for now, subscriber growth is slowing. Netflix wants to get bigger, as do its investors, who have already worried enough to wipe $140 billion from the company’s stock market cap since November. Netflix has said the slower growth may be driven by increased pressure from challengers, including those in the entertainment industry like Disney and HBO who are copying Netflix with their own streaming services.

    When companies struggle to increase their sales as quickly as they hope, they usually look for new ways to make money – and this can often be found in advertising. Amazon started out as just an online shopping mall, but now it collects billions of dollars a year from companies that pay it to make sure you see their dog beds or pulse oximeters.

    Netflix with commercials may keep the price lower for subscribers. Or it could just be padding the company’s profits. I’m not sure we’ll get lower prices if manufacturers pay to make sure we see their products prominently on Amazon or Instacart or on Walmart’s shelves.

    I’m curious to see what Netflix does, both because I like streaming without commercials and because this is an intriguing role reversal.

    In the digital age, we usually see young whippersnappers challenging industry leaders. Except this time, old guard entertainment companies like Disney are taking over a technology company. This doesn’t happen often!

    This time, the tech company is the big, profitable company warning its staff to be more frugal. The entertainment grandparents, plus Amazon and Apple, are the ones throwing money around to try and win new customers quickly, sometimes with discounted subscription prices.

    And just like the media giants copied Netflix, now Netflix is ​​stealing a little bit from them. Netflix eschewed TV ratings for years, but now it sort of has them. Like old school TV, some Netflix shows slowly trickle out new episodes, rather than all at once for the binge eating the streaming service became known for.

    HBO Max, Disney+, and Hulu, as well as some other streaming services from conventional entertainment companies, have two tiers, one with ads that cost less and another with no commercials and a higher monthly fee. That could tempt Netflix to do something similar.

    It’s not clear how tech companies like Netflix and Facebook could change their products and their relationship with us when they’re already close to the top of the mountain and it’s hard to keep climbing. This is still new to the companies and their users, and we don’t know how tech companies will act if they are the Goliaths being challenged by Davids.

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      Related, a great visual from parallel digital worlds from the Norwegian broadcaster NRK: The cities of Kharkiv, Ukraine and Belgorod, Russia, are not far apart geographically. But on TikTok, the war is always present on the Ukrainian side of the border, while users on the Russian side mostly see craziness.

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