Netflix Should Sell Ads(stratechery.com)
stratechery.com
Netflix Should Sell Ads
https://stratechery.com/2022/why-netflix-should-sell-ads/
374 comments
I just want to say, I am so happy you and others here are voicing this opinion on ads. I agree whole heartedly and avoid them like the plague — because they are a plague. A social disease infecting nearly every facet of modern reality, and rotting away at it.
In my own spaces, nothing with a logo is allowed to be displayed. This makes for a significantly better feeling space. In the past, people have walked in and made comments like “it feels so good in here!” — I attribute it in large part to eliminating the nonstop psychic bombardment of advertising.
When buying new products, I go to significant lengths making sure the item has an ad that can be managed. If I cannot find a product with a logo that’s easily removable, I do not purchase for the most part.
If a streaming service shows an ad to me, it goes off or I leave the area. It is simple.
Other people do not have the right to intrude in my cognition against my will, ESPECIALLY these gluttonous people running megacorporations. They are reducing consciousness for a quick buck against our will. Put another way, they are injecting their ego and greed into anyone possible against their will. I find it to be a type of psychic assault analogous to certain depraved physical assaults relating to self-propagation.
My intuition says ads make us dumber, more compliant, poorer, worse thinkers, more impulse driven, and more subject to external authority; among other pacifying and stupefying impacts. It is a disease worth fighting against.
In my own spaces, nothing with a logo is allowed to be displayed. This makes for a significantly better feeling space. In the past, people have walked in and made comments like “it feels so good in here!” — I attribute it in large part to eliminating the nonstop psychic bombardment of advertising.
When buying new products, I go to significant lengths making sure the item has an ad that can be managed. If I cannot find a product with a logo that’s easily removable, I do not purchase for the most part.
If a streaming service shows an ad to me, it goes off or I leave the area. It is simple.
Other people do not have the right to intrude in my cognition against my will, ESPECIALLY these gluttonous people running megacorporations. They are reducing consciousness for a quick buck against our will. Put another way, they are injecting their ego and greed into anyone possible against their will. I find it to be a type of psychic assault analogous to certain depraved physical assaults relating to self-propagation.
My intuition says ads make us dumber, more compliant, poorer, worse thinkers, more impulse driven, and more subject to external authority; among other pacifying and stupefying impacts. It is a disease worth fighting against.
I haven't used TV for any kind of broadcast, or literally anything that would in any way contain ads for past cca 15 years. TV I have has no wifi connection, never had one, never will have.
I've become physically allergic to ads, anywhere. The way they are done reminds me of those drawings showing some nasty fugly stuff being squished into consumer's brain.
This causes minor issues sometimes when we visit some friends and they have a TV blasting all the time, with their kids being fairly addicted to general media consumption. Anytime this happens and I see how they are glued to phones or consoles is a stark warning about choosing different path for my small kiddoz. Such a path you can lead them on by example.
The amount of time we have thanx to this to spend on more important matters in life is non-trivial.
I've become physically allergic to ads, anywhere. The way they are done reminds me of those drawings showing some nasty fugly stuff being squished into consumer's brain.
This causes minor issues sometimes when we visit some friends and they have a TV blasting all the time, with their kids being fairly addicted to general media consumption. Anytime this happens and I see how they are glued to phones or consoles is a stark warning about choosing different path for my small kiddoz. Such a path you can lead them on by example.
The amount of time we have thanx to this to spend on more important matters in life is non-trivial.
Man, I try to explain the diseased nature of the modern advertising and people look at me like I'm crazy.
But look at TV/radio broadcasts. Look at the streets you walk on. The websites you browse. It's literally everywhere, and its only purpose is to catch your eye to make you feel like you need to buy stuff. And they will stop at nothing to achieve that, including making you feel inadequate or abusing your weaknesses.
And in the last 15 years, we've let these unscrupulous people gather all sorts of data on who we are and what we do, which they use to target us with the ads that manipulate us the best.
That is what sounds crazy to me.
Preaching to the choir, I know. It amazes me that most people don't seem to care all that much. I wonder if we're just overly sensitive to interruptions and manipulation.
But look at TV/radio broadcasts. Look at the streets you walk on. The websites you browse. It's literally everywhere, and its only purpose is to catch your eye to make you feel like you need to buy stuff. And they will stop at nothing to achieve that, including making you feel inadequate or abusing your weaknesses.
And in the last 15 years, we've let these unscrupulous people gather all sorts of data on who we are and what we do, which they use to target us with the ads that manipulate us the best.
That is what sounds crazy to me.
Preaching to the choir, I know. It amazes me that most people don't seem to care all that much. I wonder if we're just overly sensitive to interruptions and manipulation.
Right with you on that. I hate the loss of control when made to watch ads.
I've already dropped 1 streaming service (NowTV) for forcing me to watch trailers before the shows I actually pay to watch.
I'm considering dropping Prime for the same reason. With Prime you can at least skip trailers but why can't I just opt out of the bloody things the first place?
Auto-playing anything is tedious annoying. Auto-playing, _unskippable_ anything is an abomination in my personal opinion and not something I will pay for.
I've already dropped 1 streaming service (NowTV) for forcing me to watch trailers before the shows I actually pay to watch.
I'm considering dropping Prime for the same reason. With Prime you can at least skip trailers but why can't I just opt out of the bloody things the first place?
Auto-playing anything is tedious annoying. Auto-playing, _unskippable_ anything is an abomination in my personal opinion and not something I will pay for.
The article is proposing offering a two tiers, one with ads and one without, which is what most of Netflix's competitors do.
That would allow you and others who feel similarly to continue watching ad-free.
That would allow you and others who feel similarly to continue watching ad-free.
Imagine if we had a company that managed to produce its products with minimal waste and had an efficient recycling program. It would be a little bit more expensive to run because it was paying for the externalities, but the profit margins were high enough that a business could still be had without destroying itself.
Now, a bunch of competitors show up and they just don't care about the environment. They dump all the waste on their neighbors. Their products cost a less than the main company, but they give you a "green option" where you can pay a bit more to offset (some) of the externalities.
What you are proposing is that the company goes down in their principles to compete with their toxic competitors. For what?
Now, a bunch of competitors show up and they just don't care about the environment. They dump all the waste on their neighbors. Their products cost a less than the main company, but they give you a "green option" where you can pay a bit more to offset (some) of the externalities.
What you are proposing is that the company goes down in their principles to compete with their toxic competitors. For what?
That is a pretty terrible analogy. For starters, there are no externalities in people choosing to subscribe to an ad-supported version.
Ads themselves are the toxic waste.
You work with ads at Google (aka, the biggest mind polluter there is) so I understand why you might think otherwise.
You work with ads at Google (aka, the biggest mind polluter there is) so I understand why you might think otherwise.
Ok, let's take a step back and look at your analogy. Pollution is a classic problem of externalities: one party is doing something that has costs, but those costs fall on people who are uninvolved. You have a company that is producing lots of pollution while creating products (A), the people who buy those products (B), and the people who are harmed by pollution (C). The reason that A doesn't take appropriate steps to avoid creating pollution is that neither A nor B suffer most of the costs of the pollution; those fall on C.
Netflix adding an ad-funded option does not fit that model because, as I said above, there are no externalities. It is a transaction entirely between Netflix and its viewers, with no uninvolved third parties who receive "toxic waste". Each potential subscriber can decide whether they prefer to pay larger amount for the current experience, or a smaller amount and also have to view ads.
Netflix adding an ad-funded option does not fit that model because, as I said above, there are no externalities. It is a transaction entirely between Netflix and its viewers, with no uninvolved third parties who receive "toxic waste". Each potential subscriber can decide whether they prefer to pay larger amount for the current experience, or a smaller amount and also have to view ads.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
> I said above, there are no externalities.
A point that you are missing is one that is often overlooked and deserves a proper essay, but to keep it short: the quality of the products is affected by the business model.
I contend that ads themselves are the waste, but it is not just those directly watching the ads that suffer from it. When a service becomes funded by ads, the best metric for quality (customers willing to pay for the product) gets separated from the best metric for its sustainability (revenue and profitability).
This is why a large part of why journalism is horrible today: any news editor has to prioritize what gives them eyeballs over "quality reporting", so no matter how many actual subscribers a newspaper still has, it is still going to be over-polarized, play to outrage culture and more "infotainment" than actual journalism.
More examples?
- Spotify and the Joe Rogan drama. Whether you agree/disagree and support/disapprove of whatever he is talking about on his show, would you agree that this whole thing would be a nothingburger if his audience were limited to the people willing to pay money to hear him?
- The whole of the sports industry. Remove "broadcast rights" and all the advertising that comes with it, and there would not be NBA kowtowing to China, or FIFA pushing a World Cup built in Qatar on the back of slave labor, or F-1 in bed with the Saudis, etc, etc.
Streaming services are already bad in the sense that they rather cater to quantity over quality, but at least the fact that people have to pay something is some kind of filter on "minimum quality". With an ad-funded model this filter is completely removed and everything starts getting produced for the lowest common denominator.
> I said above, there are no externalities.
A point that you are missing is one that is often overlooked and deserves a proper essay, but to keep it short: the quality of the products is affected by the business model.
I contend that ads themselves are the waste, but it is not just those directly watching the ads that suffer from it. When a service becomes funded by ads, the best metric for quality (customers willing to pay for the product) gets separated from the best metric for its sustainability (revenue and profitability).
This is why a large part of why journalism is horrible today: any news editor has to prioritize what gives them eyeballs over "quality reporting", so no matter how many actual subscribers a newspaper still has, it is still going to be over-polarized, play to outrage culture and more "infotainment" than actual journalism.
More examples?
- Spotify and the Joe Rogan drama. Whether you agree/disagree and support/disapprove of whatever he is talking about on his show, would you agree that this whole thing would be a nothingburger if his audience were limited to the people willing to pay money to hear him?
- The whole of the sports industry. Remove "broadcast rights" and all the advertising that comes with it, and there would not be NBA kowtowing to China, or FIFA pushing a World Cup built in Qatar on the back of slave labor, or F-1 in bed with the Saudis, etc, etc.
Streaming services are already bad in the sense that they rather cater to quantity over quality, but at least the fact that people have to pay something is some kind of filter on "minimum quality". With an ad-funded model this filter is completely removed and everything starts getting produced for the lowest common denominator.
As you should be well aware, the transactions in volving advertising are not between the media channel and its audience, but between the media channel and its advertisers. The audience is the good sold.
I'm curious as to just what research you've done into the corrosive effects of advertising on media, the public, and audiences yourself. You might begin with a mid-1990s Stanford research project on the subject:
[W]e expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.
http://infolab.stanford.edu/~backrub/google.html
The same might be said of any media channel.
There's a delightful 1909 pubication I've recommended numerous times here and elsewhere, Commercialization and Journalism, by Hamilton Holt, a magazine publisher himself. It's short, information-dense, highly-readable, and describes the state of the media industry as the implications of a business model based on mass advertising was first becoming apparent.
It is introduced with quote from John Swinton (the "anonymous New York City journalist" of Holt's text):
There is no such thing in America as an independent press. I am paid for keeping honest opinions out of the paper I am connected with. If I should allow honest opinions to be printed in one issue of my paper, before twenty-four hours my occupation, like Othello's, would be gone. The business of a New York journalist is to distort the truth, to lie outright, to pervert, to vilify, to fawn at the foot of Mammon, and to sell his country and his race for his daily bread. We are the tools or vassals of the rich men behind the scenes. Our time, our talents, our lives, our possibilities, are all the property of other men. We are intellectual prostitutes.
https://archive.org/details/commercialismjou00holtuoft/page/...
That from the 19th century.
I've compiled a light reading list of other sources which you might find compelling. It in addition to Bagdikian cited by the Stanford researchers, notable names such as Bernays, Chomsky, and McLuhan, and your own former colleague Tim Wu, to whom you might also add Tristan Harris. I'd also draw your attention specifically to Jerry Mander, who though the medium he criticised was television has many concerns that apply also to the Internet and mobile devices.
If you care to see.
I'm curious as to just what research you've done into the corrosive effects of advertising on media, the public, and audiences yourself. You might begin with a mid-1990s Stanford research project on the subject:
[W]e expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.
http://infolab.stanford.edu/~backrub/google.html
The same might be said of any media channel.
There's a delightful 1909 pubication I've recommended numerous times here and elsewhere, Commercialization and Journalism, by Hamilton Holt, a magazine publisher himself. It's short, information-dense, highly-readable, and describes the state of the media industry as the implications of a business model based on mass advertising was first becoming apparent.
It is introduced with quote from John Swinton (the "anonymous New York City journalist" of Holt's text):
There is no such thing in America as an independent press. I am paid for keeping honest opinions out of the paper I am connected with. If I should allow honest opinions to be printed in one issue of my paper, before twenty-four hours my occupation, like Othello's, would be gone. The business of a New York journalist is to distort the truth, to lie outright, to pervert, to vilify, to fawn at the foot of Mammon, and to sell his country and his race for his daily bread. We are the tools or vassals of the rich men behind the scenes. Our time, our talents, our lives, our possibilities, are all the property of other men. We are intellectual prostitutes.
https://archive.org/details/commercialismjou00holtuoft/page/...
That from the 19th century.
I've compiled a light reading list of other sources which you might find compelling. It in addition to Bagdikian cited by the Stanford researchers, notable names such as Bernays, Chomsky, and McLuhan, and your own former colleague Tim Wu, to whom you might also add Tristan Harris. I'd also draw your attention specifically to Jerry Mander, who though the medium he criticised was television has many concerns that apply also to the Internet and mobile devices.
If you care to see.
> That would allow ̶𝗒̶𝗈̶𝗎̶ ̶𝖺̶𝗇̶𝖽̶ ̶𝗈̶𝗍̶𝗁̶𝖾̶𝗋̶𝗌̶ ̶𝗐̶𝗁̶𝗈̶ ̶𝖿̶𝖾̶𝖾̶𝗅̶ ̶𝗌̶𝗂̶𝗆̶𝗂̶𝗅̶𝖺̶𝗋̶𝗅̶𝗒̶ ̶𝗍̶𝗈̶ ̶𝖼̶𝗈̶𝗇̶𝗍̶𝗂̶𝗇̶𝗎̶𝖾̶ ̶𝗐̶𝖺̶𝗍̶𝖼̶𝗁̶𝗂̶𝗇̶𝗀̶ ̶𝖺̶𝖽̶-̶𝖿̶𝗋̶𝖾̶𝖾̶.̶ ̶
Netflix to make more money out of nothing.
Netflix to make more money out of nothing.
When Foxtel or Optus (cant remember probably both) entered Australian cable TV market they promised no adds, and there were zero adds, a few years later they introduced adds and increased the price in the same letter to subscriber. most people kept it.
I am so tired of these comments about Netflix:
“I am going to cancel if Netflix splits disc from streaming.”
“I am going to cancel if Netflix raises prices.”
“I am going to cancel if Netflix makes it difficult to share passwords.”
“I am going to cancel if Netflix cancels my shows.”
“I am going to cancel if Netflix introduces ads.”
Netflix did more to free the market from the stranglehold the networks had for decades. If you want to go back to paying $150 per months for cable, be my guest. People seriously have issues with Netflix raising prices 25-30% in the past DECADE while their catalog has increased significantly?
“I am going to cancel if Netflix splits disc from streaming.”
“I am going to cancel if Netflix raises prices.”
“I am going to cancel if Netflix makes it difficult to share passwords.”
“I am going to cancel if Netflix cancels my shows.”
“I am going to cancel if Netflix introduces ads.”
Netflix did more to free the market from the stranglehold the networks had for decades. If you want to go back to paying $150 per months for cable, be my guest. People seriously have issues with Netflix raising prices 25-30% in the past DECADE while their catalog has increased significantly?
I will absolutely cancel Netflix if they introduce ads. I will cancel Netflix if they cancel shows I want to watch. I don't owe them anything in addition to the money I have already paid them for their service. Their business model and disruption of cable doesn't entitle them to my future money.
You fail to recognize one important factor. Those that did cancel dont show up to these comment threads anymore.
Me being one of them for I think I'm about to hit the 2 year mark soon on being sans-Netflix.
Any show I like and publicly does well, cancelled on season 3. Shows that have been popping up are utter trash. I was thinking of doing a month when Cowboy Bebop dropped... yea... I'm glad i didnt. I'm waiting for Witcher season 3 to drop, then I'll get it for a month and cancel it.
Their business practices are staying from, "deliver awesome content in an awesome way" to "squeeze blood from a rock".
Back in the day, Marco Polo was their shit tier show and it was awesome. The netflix exclusives that were coming out 2 years ago were trash and I could see the writing on the wall that it wasn't going to get better. What I hear about lately, it's all a fucking joke. They're hitting the theres a quality in quantity mindset and the numbers are showing that it's not working.
Maybe if they placed more focus on good movies and shows instead of the business models LITERALLY EVERYONE RAN AWAY FROM TO GET NETFLIX IN THE FIRST PLACE... they might be complaining that there aren't enough good writers and filmmakers out there because they already bought up everyone. That's a better and much more respectable problem to have instead of being a silicon valley bro who worries about "scale" during every conversation.
Me being one of them for I think I'm about to hit the 2 year mark soon on being sans-Netflix.
Any show I like and publicly does well, cancelled on season 3. Shows that have been popping up are utter trash. I was thinking of doing a month when Cowboy Bebop dropped... yea... I'm glad i didnt. I'm waiting for Witcher season 3 to drop, then I'll get it for a month and cancel it.
Their business practices are staying from, "deliver awesome content in an awesome way" to "squeeze blood from a rock".
Back in the day, Marco Polo was their shit tier show and it was awesome. The netflix exclusives that were coming out 2 years ago were trash and I could see the writing on the wall that it wasn't going to get better. What I hear about lately, it's all a fucking joke. They're hitting the theres a quality in quantity mindset and the numbers are showing that it's not working.
Maybe if they placed more focus on good movies and shows instead of the business models LITERALLY EVERYONE RAN AWAY FROM TO GET NETFLIX IN THE FIRST PLACE... they might be complaining that there aren't enough good writers and filmmakers out there because they already bought up everyone. That's a better and much more respectable problem to have instead of being a silicon valley bro who worries about "scale" during every conversation.
Yep, I tapped out on netflix too. Never said anything about it to anyone that didn't live with me. Pretty quiet and mundane decision, more like a realization it just wasn't worth it anymore.
I think we will drop it soon too. We pay for four or so streaming services and the number of times I fire up Netflix and fail to find anything I want to watch is immeasurable. I figure the best bet with these services is to periodically drop one or two for a few months until they add new contact, then bring it back to replace another one. Pointless paying for them all but only watching a select few things.
The alternative is actually torrenting.
If there was an ad free service, where you can easily watch ANY tv show or movie when you want it, I'd pay $50+/month for it.
If there was an ad free service, where you can easily watch ANY tv show or movie when you want it, I'd pay $50+/month for it.
No it’s not. Streaming tech is leaps and bounds better than pirating. Same goes for music services.
Huh? In what important way? I don't care it's technically impressive I'm being served a DRM-protected datastream through a global CDN network. I can download any show in 5 minutes and have it as a file, wholly on my own disk.
Is it though? If paid streaming services started showing ads by default, the experience would definitely be worse for customers.
You do realize they’re not even considering this options right? This is just some nobody contemplating. And even if they did, it will just be another price tier same as competition.
It’s the discussion topic, though.
Except that now there is a lot of competition in the Netflix space.
Part of the reason cable is/was so expensive is that you wanted more than one channel so you could see shows on other channels.
Netflix is now just s channel, HBO, Amazon, AppleTV (whatever they call it),Disney. Want to watch Boba Fett but still follow a show on Netflix, now you are paying for two channels. (and so on).
Of course you can rotate, Netflix one month, Disney the next, but by spacing out release to once a week, they can hook people into subscibting to several streaming services.
Part of the reason cable is/was so expensive is that you wanted more than one channel so you could see shows on other channels.
Netflix is now just s channel, HBO, Amazon, AppleTV (whatever they call it),Disney. Want to watch Boba Fett but still follow a show on Netflix, now you are paying for two channels. (and so on).
Of course you can rotate, Netflix one month, Disney the next, but by spacing out release to once a week, they can hook people into subscibting to several streaming services.
I have a problem because their catalog has decreased significantly. Out are good old shows with many seasons and twenty shows per season. In are a few formularic Netflix originals with two seasons and 8 to 10 episodes a season.
Not all is bad, of course, but I quickly run out of good content and if I see something I would like to watch later, it is often gone by then.
Then I can search for it, only for Netflix to show me a bunch of irrelevant stuff not even close to what I was looking for.
Not all is bad, of course, but I quickly run out of good content and if I see something I would like to watch later, it is often gone by then.
Then I can search for it, only for Netflix to show me a bunch of irrelevant stuff not even close to what I was looking for.
While their catalog has increased significantly in the last decade, most of it is shows they've produced or bought. The quality of these shows is hit or miss. I didn't subscribe to Netflix for serial productions. I subscribed for movies. And over the last decade their catalog has decreased significantly.
Very soon Streaming services might look expensive than cable, if you want to buy 4 or more services out of discovery+, disney+, netflix, showtime, hbo, peacock, cbs hulu, paramount, fox, appletv+, youtube red etc..
> Netflix did more to free the market from the stranglehold the networks had for decades
but we don't have any obligation to keep supporting them it they f*ck up
but we don't have any obligation to keep supporting them it they f*ck up
Piracy is still free.
Glad to see a number of others that feel the same as I do. I would love for this sentiment to grow.
The fact that subscriber growth slowdown is a reason for panic, is the reason that so many cool products and startups get worse over time.
Why not take the revenue they have and provide a good, sustainable service for that income? Why does it always have to be growth or bust?
Why not take the revenue they have and provide a good, sustainable service for that income? Why does it always have to be growth or bust?
This is a very natural phenomenon, and there's an obvious reason. When you're a growth stage company you're valued as a growth stage company, your Price:Earnings ratio will be high, because investors are already pricing in the future earnings. As your growth slows your P/E ratio drops because investors no longer expect your earnings to go up. This is fine, it's the natural process when you're saturating your market. But it causes all sorts of problems - all your engineers are paid in stock for example, and now they're underpaid versus the industry. That's fine, you don't need the same quality of engineers when you've dominated a market. You've built the thing. It's done. Let them go and build the next thing.
But the engineers aren't the only ones who are paid in stock - so are all the executives. And they want money! So you must keep the growth up. So at this point you do what Netflix is doing - start exploring other markets that you can use your existing skills to dominate. Now most likely that will fail, because by nature, you're taking the money from the home run you hit and betting on hitting another even bigger home run. For every 1 Netflix there were 10 failed competitors. But Netflix now has to try and be another Netflix, but will most likely spend their money creating 1 of those 10 failed competitors.
But the engineers aren't the only ones who are paid in stock - so are all the executives. And they want money! So you must keep the growth up. So at this point you do what Netflix is doing - start exploring other markets that you can use your existing skills to dominate. Now most likely that will fail, because by nature, you're taking the money from the home run you hit and betting on hitting another even bigger home run. For every 1 Netflix there were 10 failed competitors. But Netflix now has to try and be another Netflix, but will most likely spend their money creating 1 of those 10 failed competitors.
There is actually another way: become more. Google and Amazon are companies who kept growing because the scope of what they did kept growing. And they kept getting better at what made them big in the first place at least for another decade. Go back 20 years in time, and Google was a search engine. Today they are much, much more than that. Go back 25 years in time, and Amazon was a book store.
Netflix is just a movie service. And it is a movie service that hasn't gotten any better for a very long time. The fact that I have to spend a lot of time finding content to watch and Netflix mostly showing me the surface layer of content over and over again is extremely frustrating. It just isn't a good experience. They are about as frustrating as every other service on the market because they deliver an experience that isn't anything special: it is just as bad as every other competitor.
If they have no ambition to deliver a better service than everyone else, then why would they attract more users, and more importantly, have more users pay more for their service?
Right now Netflix is an acceptable service, but nothing more. They still have some way to go on quality. And if they started becoming the company that dares to do things a bit differently, and to do things better, this could be a platform to launch into other areas.
Netflix is just a movie service. And it is a movie service that hasn't gotten any better for a very long time. The fact that I have to spend a lot of time finding content to watch and Netflix mostly showing me the surface layer of content over and over again is extremely frustrating. It just isn't a good experience. They are about as frustrating as every other service on the market because they deliver an experience that isn't anything special: it is just as bad as every other competitor.
If they have no ambition to deliver a better service than everyone else, then why would they attract more users, and more importantly, have more users pay more for their service?
Right now Netflix is an acceptable service, but nothing more. They still have some way to go on quality. And if they started becoming the company that dares to do things a bit differently, and to do things better, this could be a platform to launch into other areas.
> And they kept getting better at what made them big in the first place at least for another decade. Go back 20 years in time, and Google was a search engine. Today they are much, much more than that. Go back 25 years in time, and Amazon was a book store.
Perhaps you picked up two bad examples. Google search is worst than ever (for their users ofc, not for the ones who get money out of it). My experience as a customer in Amazon is equally bad: bad quality products (I have to spent hours filtering and double checking in order to say "yes, that's the item I want"), reviews over 4.0 that nowadays mean nothing, intrusive ads everywhere (e.g., I searched for boots in Google image search, and suddenly all the ads in other websites are about boots sold at Amazon).
I used to trust Google (I bought domains from them, used Gmail, I even bought their Nexus 5!), but not anymore precisely because how big they have became: almost-zero human customer support, they can ban you anytime they want and give you zero reasonable excuses.
Perhaps you picked up two bad examples. Google search is worst than ever (for their users ofc, not for the ones who get money out of it). My experience as a customer in Amazon is equally bad: bad quality products (I have to spent hours filtering and double checking in order to say "yes, that's the item I want"), reviews over 4.0 that nowadays mean nothing, intrusive ads everywhere (e.g., I searched for boots in Google image search, and suddenly all the ads in other websites are about boots sold at Amazon).
I used to trust Google (I bought domains from them, used Gmail, I even bought their Nexus 5!), but not anymore precisely because how big they have became: almost-zero human customer support, they can ban you anytime they want and give you zero reasonable excuses.
> Google search is worst than ever
> My experience as a customer in Amazon is equally bad
But is that generally the case? From what I hear, non-tech people still love google (the vast, vast majority of people) and my personal experience with Amazon is pretty decent as well (though I’m not in the US, so maybe it’s not as much of an issue here) despite their search being bad.
> My experience as a customer in Amazon is equally bad
But is that generally the case? From what I hear, non-tech people still love google (the vast, vast majority of people) and my personal experience with Amazon is pretty decent as well (though I’m not in the US, so maybe it’s not as much of an issue here) despite their search being bad.
I have heard non tech people starting to complain about both Google and Amazon significantly more.
> my personal experience with Amazon is pretty decent as well
Considering the endless dark pattern manipulation to get people signed up for Prime etc, the intolerably bad search, the hard to manage/judge "sellers", the god awful semi storefronts within a storefront from actual brands etc etc.
It is just not low hassle anymore, at every stage I'm paying extra attention lest I'm getting screwed. Turns out I'd rather go to a bookstore or a hardware store or whatever at this point. Even accounting for travel time it's lower stress.
Considering the endless dark pattern manipulation to get people signed up for Prime etc, the intolerably bad search, the hard to manage/judge "sellers", the god awful semi storefronts within a storefront from actual brands etc etc.
It is just not low hassle anymore, at every stage I'm paying extra attention lest I'm getting screwed. Turns out I'd rather go to a bookstore or a hardware store or whatever at this point. Even accounting for travel time it's lower stress.
I’ve been a prime customer ever since Prime became a thing in Germany, so I can’t talk about that. Search I already agreed (though it’s not intolerably bad, it’s barely worse than google), but the rest I have no issues with, I can see who sells what and I don’t even know where to find storefronts, all my buying is done by searching for the products or finding deeplinks.
...hence "at least for another decade" :-)
Yeah this is what I mean by hitting another home run. I think Amazon has truly successfully done this multiple times. Apple has done this to some extent - although they haven't really gone far past their core expertise. Google and Facebook not as much, they just happen to have businesses with massive total addressable markets that cover for all manner of sins.
But is that even the right thing to be doing? I'd argue Netflix would be doing a hell of a lot more for it's share holders to take the profits from the successful business they've built and hand it back to shareholders, rather than start gambling that money on building new businesses that are unlikely to succeed. This is what's happening right now with Facebook. It's a social media company gambling share holder cash on becoming a completely different business with almost 0% chance of success.
But is that even the right thing to be doing? I'd argue Netflix would be doing a hell of a lot more for it's share holders to take the profits from the successful business they've built and hand it back to shareholders, rather than start gambling that money on building new businesses that are unlikely to succeed. This is what's happening right now with Facebook. It's a social media company gambling share holder cash on becoming a completely different business with almost 0% chance of success.
Great companies are not just defined by their products. Example for Google and Amazon is to illustrate that they've built a _system_ (consisting of brand, culture, values, etc) that can explore, prototype and execute in multiple different areas from scratch, and without being first to market.
Google has grown by using ad revenue to buy comoetitors or companies that do something interesting, then squeeze them for every penny of profit or dump them.
Google has a dominant search engine, a browser and massively intrusive ad placement system threaded through everything they offer. Gmail was a Hotmail clone. Android, Fitbit, Maps, Nest, and Google Earth were acquired. YouTube was bought after it out competed Google's offering. Even the advertising tech was acquired, with AdMob, DoubleClick invented outside Google.
They are dominant mostly because they have not been bothered by antitrust actions. That, at least, looks like it might happen sometime relatively soon.
Google has a dominant search engine, a browser and massively intrusive ad placement system threaded through everything they offer. Gmail was a Hotmail clone. Android, Fitbit, Maps, Nest, and Google Earth were acquired. YouTube was bought after it out competed Google's offering. Even the advertising tech was acquired, with AdMob, DoubleClick invented outside Google.
They are dominant mostly because they have not been bothered by antitrust actions. That, at least, looks like it might happen sometime relatively soon.
Netflix's growth for a while has been in not just licensing TV and movies to stream but to become a studio producing TV and movies to stream (and even to show in movie theaters). They've also grown in the TV categories they offer (through production and licensing), like unscripted "reality" TV and anime. If you don't value their growth, you're not likely to give them credit for it.
They are also working on growing into at least one new area, video games.
They are also working on growing into at least one new area, video games.
Well said. I would've rather seen Netflix continue their revenue growth by expanding into other verticals, rather than by continuously increasing their monthly price, which in my opinion is a very uninspired/lazy way of increasing revenue.
If anything, one of the best forms of competitive market capitalism is when a company that's successful in one sector, invests in entering a new one, thereby adding competition to whatever that new sector is. Shareholders get more growth out of the company, consumers in that sector get more competition for their $, win-win.
If anything, one of the best forms of competitive market capitalism is when a company that's successful in one sector, invests in entering a new one, thereby adding competition to whatever that new sector is. Shareholders get more growth out of the company, consumers in that sector get more competition for their $, win-win.
Maybe this is because Netflix is a publicly traded company? with similar publicly traded companies, there is always a constant pressure to push up the value, and earn more money. Maybe they should take it private
> That's fine, you don't need the same quality of engineers when you've dominated a market. You've built the thing. It's done. Let them go and build the next thing.
> But the engineers aren't the only ones who are paid in stock - so are all the executives. And they want money! So you must keep the growth up.
This might be why so many (not all) great software services and products eventually turn into crap. They start out focused and well made, caring about their users and workers. Then the owners and decision makers try to squeeze everything out of it and carelessly add bloat, while "optimizing" internal processes into oblivion. And all that because some people simply cannot get enough stuff, is a business' goal always to extract value and power for the few despite already having massive market share, a good name and happy customers?
There is another path: invest in the long term by putting workers and customers first. Give back, invest in R&D, education, open source, social stability, the _quality_ of their product, growth of their workers and relationship with their customers.
If this was the common path of successful companies, we would live in a different, fairer, more sustainable advanced society.
> But the engineers aren't the only ones who are paid in stock - so are all the executives. And they want money! So you must keep the growth up.
This might be why so many (not all) great software services and products eventually turn into crap. They start out focused and well made, caring about their users and workers. Then the owners and decision makers try to squeeze everything out of it and carelessly add bloat, while "optimizing" internal processes into oblivion. And all that because some people simply cannot get enough stuff, is a business' goal always to extract value and power for the few despite already having massive market share, a good name and happy customers?
There is another path: invest in the long term by putting workers and customers first. Give back, invest in R&D, education, open source, social stability, the _quality_ of their product, growth of their workers and relationship with their customers.
If this was the common path of successful companies, we would live in a different, fairer, more sustainable advanced society.
Sure, but as I'm sure you're aware, the current system makes this model impossible for all but the most niche products: a faster growing, better funded (because they are growing faster) product will outspend you until you die. The existing VC model is hostile to 'slow growth' companies and products.
Then change the model!
I see the value in your point--it reflects our current reality--but we should never lose sight of the fact that we can replace systems that don't serve our best interests. Yes, it takes hard work, but maintaining the status quo is not the only way forward.
I see the value in your point--it reflects our current reality--but we should never lose sight of the fact that we can replace systems that don't serve our best interests. Yes, it takes hard work, but maintaining the status quo is not the only way forward.
I mean fair enough but isn't that the problem? That people would like to change the system but the exact mechanism for doing so is not at all obvious.
Based on the earlier comments, it feels like step 1 is to renegotiate salaries away from stock. It makes sense when you can't afford reasonable salaries, but it's not something that's been written in stone.
Also, don't hire executives who have a demonstrated history of making bad decisions for a business' long term stability in the name of "shareholder value".
Also, don't hire executives who have a demonstrated history of making bad decisions for a business' long term stability in the name of "shareholder value".
The other problem is the insane attrition and low tenure rates that directly disincentivizes any investment in individuals.
No, not really. If you change the model you’ll immediately be out-competed by anyone who didn’t change the model.
It's not impossible in a real sense. Many SMBs do this, large players do it somewhat sometimes in some areas and have proven this strategy to work on some level. I want _more_ of that and I think it would be better for pretty much everyone in the long term.
My comment above isn't nearly as nuanced as it could be - I'm pressuring a pain point that I think needs more attention. But I'm optimistic, It seems like sustainability awareness and long term, holistic / system thinking is growing.
My comment above isn't nearly as nuanced as it could be - I'm pressuring a pain point that I think needs more attention. But I'm optimistic, It seems like sustainability awareness and long term, holistic / system thinking is growing.
I was at a company whose P/E was super high as we saturated our market. The CEO would publicly state that the price didn't make sense to him, and we tried to find more home runs. In the end, inevitably slowing (but still positive and profitable!) growth caused a panic and investor-mandated layoffs.
I'm sure it could have been handled better, but elegantly transitioning out of hypergrowth is a surprisingly hard problem, even when you recognize it as such.
I'm sure it could have been handled better, but elegantly transitioning out of hypergrowth is a surprisingly hard problem, even when you recognize it as such.
> all your engineers are paid in stock for example, and now they're underpaid versus the industry.
I was under the impression that Netflix generally doesn't offer stock to engineers, but instead pays above market salaries.
I was under the impression that Netflix generally doesn't offer stock to engineers, but instead pays above market salaries.
This is not a “natural phenomenon”. It’s a phenomena that is a result of being a publicly traded company since investors demand growth. Stay private and you can set your own goals. Growth has to end at some point other wise public companies are really just little “Clippies” optimizing for growth and destroying everything in its path.
You use the word "nature" and its cognates surprisingly frequently in this description of an entirely artificial set of processes.
If you want to quibble the semantics, we can take this even further.
I’m not sure if you’re aware, but humans are of the biological class mammalia. We are nature.
If we’re nature, then everything we do is natural.
Unless you want to enshrine Netflix’s market position in law, Companies, like species, will always compete with each other.
Companies in our civilizations, like species in our forests, will expand until the limits of TAM or outcompetition by a predator company.
I’m not sure if you’re aware, but humans are of the biological class mammalia. We are nature.
If we’re nature, then everything we do is natural.
Unless you want to enshrine Netflix’s market position in law, Companies, like species, will always compete with each other.
Companies in our civilizations, like species in our forests, will expand until the limits of TAM or outcompetition by a predator company.
When you need to define the concept of artifice out of existence, and hope your audience fails to notice, in order to sustain your argument, what does that say about the argument?
And thus, we have reached the logical endpoint of semantic debate, ie. no longer confronting the underlying ideas in GP's comment.
If you replace the word "natural" with "artificial" in GP's comment, it doesn't change anything about what he/she was saying.
If you replace the word "natural" with "artificial" in GP's comment, it doesn't change anything about what he/she was saying.
I wonder that so often, and the answer I find myself landing on is... greed.
It's greed. Investors want to make more money, they don't care about the product, or the experience in using the product. They just want more money. That's how the whole system is set up. It's sadly just how it is.
It's greed. Investors want to make more money, they don't care about the product, or the experience in using the product. They just want more money. That's how the whole system is set up. It's sadly just how it is.
I think it’s a little unfair to call it greed because of how the world operates. Dumped down a little the path for a successful company in the west is to have founders create a small company with a great culture that cultivates growth through a great product. Eventually bigger capital notices the rapid growth and invests, typically letting current and coming employees buy options at the same rate they do because they want to keep the culture until the IPO. Eventually the company has grown enough that it is now a large or even enterprise company while skipping all the steps in between because of the rapid growth, and with all the challenges that come with the that, and then the IPO launches. Talented capital will launch lower than they could, so that they can IPO at 100 and then truly sell out at 400-500 (made up numbers to give you the idea) a couple of years later where the company becomes a truly public company.
During those years the founders and much of the talent are very likely to leave the company. Partly because working for an enterprise wasn’t what they signed up for, but mainly because the rapid growth has likely stagnated, which means that you can get so much more out of your time building something new.
Your time is limited and how you get to spend it is directly tied to your wealth. Why would you waste either on something that doesn’t grow when you could be growing your wealth 40% a month on something else?
Maybe it’s greed, but it’s also how you play our system.
The only weird part about it all is why we aren’t teaching children financial impact and how to maximise it in schools. I mean, I had no idea how rigged the world is until we had our first million (in Danish KR, so around $150k). Simply being able of putting down 30% on the loan for our house ourselves means that we have around 10k DKK ($1500) more to ourselves, every month, compared our friends who are similar places in life minus the start capital and thus are paying those $1500 directly into the banks pockets.
During those years the founders and much of the talent are very likely to leave the company. Partly because working for an enterprise wasn’t what they signed up for, but mainly because the rapid growth has likely stagnated, which means that you can get so much more out of your time building something new.
Your time is limited and how you get to spend it is directly tied to your wealth. Why would you waste either on something that doesn’t grow when you could be growing your wealth 40% a month on something else?
Maybe it’s greed, but it’s also how you play our system.
The only weird part about it all is why we aren’t teaching children financial impact and how to maximise it in schools. I mean, I had no idea how rigged the world is until we had our first million (in Danish KR, so around $150k). Simply being able of putting down 30% on the loan for our house ourselves means that we have around 10k DKK ($1500) more to ourselves, every month, compared our friends who are similar places in life minus the start capital and thus are paying those $1500 directly into the banks pockets.
You don’t see the negative externalities of thousands of start ups growth hacking just so that they can IPO? And thousands of already public companies hacking growth to stay publicly traded?
Or do you just not want to see it?
Or do you just not want to see it?
If you’re asking me if I know that the world isn’t fair then I hate to tell you this, but I feel a lot more guilty about the shady supply line that led to me being capable of writing this reply on my iPhone than of any work or investment I’ve ever personally been involved in.
That being said, I don’t agree with the sentiment that a company needs to “growth hack” to go from startup to successful IPO. It obviously happens, but a lot of companies succeed by selling something that is actually useful. It may not be as glamorous as working for a FAANG company, but you can make a pretty decent career out of helping non-tech companies scale beyond excel sheets.
That being said, I don’t agree with the sentiment that a company needs to “growth hack” to go from startup to successful IPO. It obviously happens, but a lot of companies succeed by selling something that is actually useful. It may not be as glamorous as working for a FAANG company, but you can make a pretty decent career out of helping non-tech companies scale beyond excel sheets.
To be fair, it's not just investor greed that does it.
Plenty of good managers and engineers just want more money too. Once the hyper-growth stalls, many early employees cash out their lottery ticket and leave to take higher-paying jobs elsewhere. They don't care as much about maintaining the product and experience that they built as they do about making more money.
(And this is exacerbated by the fact that many people prefer building new things than to maintain the existing things they built.)
Plenty of good managers and engineers just want more money too. Once the hyper-growth stalls, many early employees cash out their lottery ticket and leave to take higher-paying jobs elsewhere. They don't care as much about maintaining the product and experience that they built as they do about making more money.
(And this is exacerbated by the fact that many people prefer building new things than to maintain the existing things they built.)
Greed is just the byproduct of uncapped capitalism. Disincentivise the pursuit of constant growth, and the world would be a lot less evil.
> Disincentivise the pursuit of constant growth, and the world would be a lot less evil.
Not only that, but perhaps the world would be a lot less.
Not only that, but perhaps the world would be a lot less.
You're going to have to do some work to establish that. It's pretty clear from the historical record and from ancient literature that greed predates capitalism by millennia. You could argue that capitalism makes it worse, but I don't see much evidence of that in history.
> Greed is just the byproduct of uncapped capitalism
No its a byproduct of human beings.
> Disincentivise the pursuit of constant growth, and the world would be a lot less evil.
Or actually it would be much worse.
No its a byproduct of human beings.
> Disincentivise the pursuit of constant growth, and the world would be a lot less evil.
Or actually it would be much worse.
I think it’s the tragedy of public traded companies that eventually there’ll be such an overwhelming demand from the shareholders -given that they often hold a majority combined to just the directors- to monetise and provide dividend and/or a raising share, that they must go below the belt with tactics, like letting go of the initial core values.
If they do not do so, odds are big - but no given - that a competitor with a enormous bag of VC money might enter the scene and subsidise the losses like any other platform gameplayer does these days, that might undercut the incumbent in quality and slowly but surely garner enough market share to start flipping the coin, and the process either resets itself or doesn’t.
One must be constantly on top of the game to remain at the top, being handicapped by fickle things like principal values and the like.
I wish there was a combination of ngo and corp that focussed on solving the problem with the aim to dissolve oneself when the problem is gone, instead of becoming the problem.
If they do not do so, odds are big - but no given - that a competitor with a enormous bag of VC money might enter the scene and subsidise the losses like any other platform gameplayer does these days, that might undercut the incumbent in quality and slowly but surely garner enough market share to start flipping the coin, and the process either resets itself or doesn’t.
One must be constantly on top of the game to remain at the top, being handicapped by fickle things like principal values and the like.
I wish there was a combination of ngo and corp that focussed on solving the problem with the aim to dissolve oneself when the problem is gone, instead of becoming the problem.
Not all public companies panic if they don't grow fast over time. But other industries are also harder to penetrate by startups. But I wouldn't blame stock markets for this obsession, especially as companies already show this pre-IPO.
Look at what happened to DocuSign. They provide an amazing service, great growth yet stockholders decided to completely shit on it. Then the CEO apologizes and says they missed the mark by not growing out their business the right way. IMO, they did a great job and provided a valuable service. Yet shareholder are completely forcing them to react and do things they really had no interest in pursuing.
It was priced at 30x sales! Now it's back to 10x sales... which is a slightly higher multiple than before the pandemic.
For context, here's the p/s of the S&P 500 https://www.multpl.com/s-p-500-price-to-sales
DocuSign's management chose to lose money in pursuit of growth. Then the growth stopped and they were just losing money.
For context, here's the p/s of the S&P 500 https://www.multpl.com/s-p-500-price-to-sales
DocuSign's management chose to lose money in pursuit of growth. Then the growth stopped and they were just losing money.
"The tragedy of publicly traded companies" sounds like a very useful term! But I don't think that you need to look any deeper than the basic market mechanism of shareholders with realistic expectations happily selling to future shareholders with higher expectations (e.g. unrealistic expectations). If the latter exist, they will offer more than the former think the shares are worth, deal. It's a market mechanism as basic as gravity, "race to the least pessimistic".
The only thing that sometimes prevents it is when holders are emotionally attached (old family stock or brand fandom) or when holders have a strategic need to prevent certain control scenarios (often nationally flavored).
The only thing that sometimes prevents it is when holders are emotionally attached (old family stock or brand fandom) or when holders have a strategic need to prevent certain control scenarios (often nationally flavored).
"Growth for the sake of growth is the ideology of the cancer cell."
Facebook lost half it's value (maybe literally by now) because they stopped growing on just their flagship product (the MAU went down by a rounding error).
So why not provide a sustainable service? Because it's not valued in the market.
So why not provide a sustainable service? Because it's not valued in the market.
Facebook degraded in quality and tried to squeeze everything out of their users instead of improving quality and innovation. It's short term tactics.
Sustainable service is valued, at the rate of inflation. If you want 20% annual returns over inflation, then you need to provide commensurate growth.
That doesn't seem to align with any economic theory or evidence I'm aware of. Care to explain your reasoning?
Not GP, but doesn't this just kinda follow from the definition of inflation? If you keep offering the same value but the currency it is priced in inflates by N%, you "should" be able to raise your prices by N% and not gain/lose any customers since the inflation adjusted price remains the same. This will obviously result in revenue growth of N%.
If you want revenue growth above inflation, you will need to either acquire more users, charge them more for the same product, or both. Building up the value of the product you're offering can help with both. Of course in the case of facebook these points get a bit muddled, since the users get the product for free anyway and they have such a giant customer base that finding new users is becoming an issue.
If you want revenue growth above inflation, you will need to either acquire more users, charge them more for the same product, or both. Building up the value of the product you're offering can help with both. Of course in the case of facebook these points get a bit muddled, since the users get the product for free anyway and they have such a giant customer base that finding new users is becoming an issue.
Why would anyone pay a premium for equity in Netflix if it is not going to provide premium returns? If I wanted average return on investment, then I would just buy a low cost index fund like VOO.
You seem to be answering a different question. I asked about you saying:
> Sustainable service is valued, at the rate of inflation.
> Sustainable service is valued, at the rate of inflation.
Your original comment presumably talks about Facebook’s market capitalization (Facebook’s value going down), and that being a sign that the market does not “value” a sustainable service. I interpreted a sustainable service as one that does to grow by leaps and bounds and every year, and instead just chugs along offering a steady product at a steady price.
Hence my comment being that the market “values” businesses with sustainable services by offering to pay a premium for a piece of the business commensurate with the rate of inflation. Which is why Facebook’s stock price stalled, since their market cap had priced in much higher growth, and prospective buyers now do not expect that growth, and are willing to pay much less for a piece of Facebook.
Hence my comment being that the market “values” businesses with sustainable services by offering to pay a premium for a piece of the business commensurate with the rate of inflation. Which is why Facebook’s stock price stalled, since their market cap had priced in much higher growth, and prospective buyers now do not expect that growth, and are willing to pay much less for a piece of Facebook.
[deleted]
What are you talking about? Of course its valued, that literally why those companies have value.
But of course its valued far less then a growing company.
This seems to be fairly basic and totally logical. Stock market is forward looking. If your future it the same as present that fine but it means over time you shrink relatively and you are likely not robust against paradigm changes.
But of course its valued far less then a growing company.
This seems to be fairly basic and totally logical. Stock market is forward looking. If your future it the same as present that fine but it means over time you shrink relatively and you are likely not robust against paradigm changes.
I've long been a paid sub-scriber to Strava. I was so happy when Mark Gainey returned to the company and returned focus to making it just a really great experience.
I think I even remember hearing him say in an interview that he would be happy to just keep the current number of subscribers and make it a more focused product.
That matters because there was a time when it seemed to be turning into just another social network. At that time the major new feature seemed to be "inspirational blog posts". That's not for me.
For about a year I cancelled my subscription but returned when the focus when back on providing useful features like route planning.
I wish that Netflix would just concentrate on providing a better experience and better content instead of degrading the existing experience even more.
I think I even remember hearing him say in an interview that he would be happy to just keep the current number of subscribers and make it a more focused product.
That matters because there was a time when it seemed to be turning into just another social network. At that time the major new feature seemed to be "inspirational blog posts". That's not for me.
For about a year I cancelled my subscription but returned when the focus when back on providing useful features like route planning.
I wish that Netflix would just concentrate on providing a better experience and better content instead of degrading the existing experience even more.
This would only be possible if you don’t take investor money. Investors expect their investment to keep growing. Unfortunately, while it’s hard to build a Netflix with other people’s money, it’s near impossible to bootstrap.
The closest one was Crunchy Roll I think, and that was only possible since they were essentially pirating their content if I remember correctly. In the end, even with piracy it wasn’t sustainable until investor money came into play.
The closest one was Crunchy Roll I think, and that was only possible since they were essentially pirating their content if I remember correctly. In the end, even with piracy it wasn’t sustainable until investor money came into play.
Investors expect to make money from their investment, but not necessarily that it keep growing. For instance, investors in commercial real estate expect steady income and some appreciation. They do not expect hockey stick growth. (I'm talking about those buying commercial real estate, not developers).
I strongly disagree. In general, investors would like as much growth as possible. Otherwise, they will pull their investment. As for venture capitalists, they would like hockey stick growth. They don't invest in startups that don't have that potential. Let's not confuse donations with investments.
VCs invest in high-risk, high-reward investments. Retired people want steady returns with less risk. Investment vehicles exist on a spectrum. You cannot talk about "investors" as a single class with a single preference. That's how both government bonds and VC can exist.
You’re right, but stocks aren’t bonds. There’s increased risk which implies increased gains. If “investors” wanted low gradual returns, they would buy bonds instead of stock. Investors want continuous growth every quarter, which is why Wall Street tends to focus on the short term. I’m not defending the status quo. I’m just describing reality.
> If “investors” wanted low gradual returns, they would buy bonds instead of stock.
If you buy Google, Amazon or Facebook, sure. But there are also lower-risk stocks. You can invest in P&G or J&J which are all about selling the same products again and again and again to the same customers and slowly expand by acquiring smaller companies with a similar business model.
If you buy Google, Amazon or Facebook, sure. But there are also lower-risk stocks. You can invest in P&G or J&J which are all about selling the same products again and again and again to the same customers and slowly expand by acquiring smaller companies with a similar business model.
Yes, and investors of those companies expect constant growth. Bond yields are no where near good enough for these investors. Case in point, P&G and J&J stocks have yielded about 500% and 300% in value respectively since 2000. It’s even higher if you go back further.
Like it or not, that is reality. Ie if people want lower yields, they invest in different industries, companies, or financial instruments.
Like it or not, that is reality. Ie if people want lower yields, they invest in different industries, companies, or financial instruments.
>Why not take the revenue they have and provide a good, sustainable service for that income? Why does it always have to be growth or bust?
Shareholder Value.
Shareholder Value.
Making companies chase growth is good for the economy.
Assume for the sake of contradiction that we the humankind decide not to incentivize companies to chase growth. This would mean the humankind is enabling a company to sustain its current position with existing assets and operations and nothing new. Since the company has no incentive to grow (introduce something new), the rational company will not create new additional value. Since the company is in a market dominant position, no new entrants will be able to create new additional value.
Curious to see if others see any ways to protect the interests of the humankind while taking away the incentives for market dominant companies to continue to make progress.
Assume for the sake of contradiction that we the humankind decide not to incentivize companies to chase growth. This would mean the humankind is enabling a company to sustain its current position with existing assets and operations and nothing new. Since the company has no incentive to grow (introduce something new), the rational company will not create new additional value. Since the company is in a market dominant position, no new entrants will be able to create new additional value.
Curious to see if others see any ways to protect the interests of the humankind while taking away the incentives for market dominant companies to continue to make progress.
Because increasing returns of scale combined with the increasing competition makes long-term profitability uncertain.
Netflix is the only big streaming service that relies on streaming as the only source of revenue. Netflix has to spend huge sums every year on new programming to keep subscribers. Disney/Hulu/ESPN/Hotstar, Amazon, Disney, Apple, Peacock, HBO Max, and YouTube plan to make deep cuts into Netflix revenue in the future.
Netflix is the only big streaming service that relies on streaming as the only source of revenue. Netflix has to spend huge sums every year on new programming to keep subscribers. Disney/Hulu/ESPN/Hotstar, Amazon, Disney, Apple, Peacock, HBO Max, and YouTube plan to make deep cuts into Netflix revenue in the future.
The issue is its possible, but if you dont someone else will, then will buy you and make you do the thing you were avoiding.
Relative growth is the ultimate leverage of power.
And while you think that might be some line or something it isn't. In the early 2000s banks basically did that, if you played it easy one that geared up more simply bought you up and they all went big into MBSs
Relative growth is the ultimate leverage of power.
And while you think that might be some line or something it isn't. In the early 2000s banks basically did that, if you played it easy one that geared up more simply bought you up and they all went big into MBSs
Because then they will get overtaken. The growth slowdown will turn into a growth stop and after that they will begin to shrink.
Unless you're a shareholder, is that actually a problem?
There would be nothing wrong in Netflix say: We're no longer able to buy the shows and movies we'd like, because the studios are setting up their own streaming services. We now going to shift towards creating less content, but higher quality.
As I see it, one of Netflix major problems is the quality of content. They can't buy quality content anymore, so they're attempting to just make as much content as possible, hoping something will stick. Writing have been a major problem for Netflix for years. They're able to create an initial good season one of a show, but are never able to deliver in the following seasons.
Personally I don't see the problem in Netflix becoming a niche player with their own high quality content, that could allow them to lower prices as well. It's only a problem because their shareholders overpaid and insist that Netflix remain a major streaming platform in order to recover their investment.
There would be nothing wrong in Netflix say: We're no longer able to buy the shows and movies we'd like, because the studios are setting up their own streaming services. We now going to shift towards creating less content, but higher quality.
As I see it, one of Netflix major problems is the quality of content. They can't buy quality content anymore, so they're attempting to just make as much content as possible, hoping something will stick. Writing have been a major problem for Netflix for years. They're able to create an initial good season one of a show, but are never able to deliver in the following seasons.
Personally I don't see the problem in Netflix becoming a niche player with their own high quality content, that could allow them to lower prices as well. It's only a problem because their shareholders overpaid and insist that Netflix remain a major streaming platform in order to recover their investment.
> Unless you're a shareholder, is that actually a problem?
You are aware that shareholders the owners of the company right?
Sure you might not care if Netflix becomes niche, but you have like 15$ a month of skin in the game. Not million or billions.
You are aware that shareholders the owners of the company right?
Sure you might not care if Netflix becomes niche, but you have like 15$ a month of skin in the game. Not million or billions.
This is the fear, but is it reality?
There are limited humans on this earth and if you consider, that you cannot reach them all and there is also competition, which realistically also takes some of the market, why not be fine with reality and a saturated market you cater for well?
There are limited humans on this earth and if you consider, that you cannot reach them all and there is also competition, which realistically also takes some of the market, why not be fine with reality and a saturated market you cater for well?
Of course it is. Happens _all the time_ in business that the competition catches up and surpasses.
It could be difficult to catch up to the market leader, if the market leader simply continues to improve their core product. First they would need to catch up to the functionality and then also go all that long way of improving. Unless something else comes along replacing / disrupting movies and series or video technology, Netflix could stick to that and improve it.
That is in theory. I think most businesses lose the original vision at some point though and their products worsen, instead of improving. I would guess, that it is not in Netflix' genes to keep one core product and vision of the product.
The idea to show ads on Netflix is like the nail in the coffin. Users would jump to the first capable alternative, that does not show ads. Netflix would inflict itself a weak point, at which competitors could jump in and start eating their market share. It would be a big worsening of their product. Users might think: "I am paying for this, yet I am seeing ads?!"
That is in theory. I think most businesses lose the original vision at some point though and their products worsen, instead of improving. I would guess, that it is not in Netflix' genes to keep one core product and vision of the product.
The idea to show ads on Netflix is like the nail in the coffin. Users would jump to the first capable alternative, that does not show ads. Netflix would inflict itself a weak point, at which competitors could jump in and start eating their market share. It would be a big worsening of their product. Users might think: "I am paying for this, yet I am seeing ads?!"
[deleted]
[deleted]
Because it’s a publicly traded company and investors demand growth. I really wish companies would stop listing after IPO and just stay private.
> Why does it always have to be growth or bust?
because they borrowed too much money that they need to pay back.
because they borrowed too much money that they need to pay back.
This changes the brand of Netflix considerably. While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads. I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company.
> While many competitors do this (Hulu, YouTube), it's a terrible experience and I've seen both myself and others simply turn to Netflix to avoid the ads
In credit to YouTube and Hulu, they give you the option to go ad free, or in the case of YouTube pay nothing at all. Have cheap price and ads, or pay a little more and get the ad free experience. I happily enjoy ad-free Netflix, YouTube and Hulu.
> I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company.
If you have read the article and try to respond to the authors points more directly, he is making a pretty compelling case as to why this is not short term thinking at all - subscriber growth is effectively over for the company now in the near term, there are little new customer households left to sell a subscription to for Netflix, which is of course why we are seeing more frequent subscription price rises too. On the contrary, he is laying out a long term strategy that may still deliver growth, something subscriptions increasingly won't as subscriber growth continues to inevitably fall.
As YouTube and Hulu both prove, one can have ad-supported and ad-free subscription tiers on the same service, and I suspect is likely the path Netflix would follow if they pursue such a plan in future. While as an individual you may not like ads (thats fine!), the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business, which so far has been price rises...
In credit to YouTube and Hulu, they give you the option to go ad free, or in the case of YouTube pay nothing at all. Have cheap price and ads, or pay a little more and get the ad free experience. I happily enjoy ad-free Netflix, YouTube and Hulu.
> I think this would break their brand and is more short-term thinking, i.e. "how do we increase value in the next quarter", rather than long-term thinking of how to keep growing as a company.
If you have read the article and try to respond to the authors points more directly, he is making a pretty compelling case as to why this is not short term thinking at all - subscriber growth is effectively over for the company now in the near term, there are little new customer households left to sell a subscription to for Netflix, which is of course why we are seeing more frequent subscription price rises too. On the contrary, he is laying out a long term strategy that may still deliver growth, something subscriptions increasingly won't as subscriber growth continues to inevitably fall.
As YouTube and Hulu both prove, one can have ad-supported and ad-free subscription tiers on the same service, and I suspect is likely the path Netflix would follow if they pursue such a plan in future. While as an individual you may not like ads (thats fine!), the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business, which so far has been price rises...
I did read the article thoroughly, and I think he hasn't seen the larger perspective. I'm an investor in Netflix, and have also dug deeply into many other in-depth analyses of them, and while he says its "long-term", that doesn't mean it is.
Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide), and many companies have experienced what they call "demand pulled forward", i.e. extra growth in pandemic that then falls as pandemic heads towards a close. This is short term, and he has assumed that the slow in growth is the "inevitable decline" of Netflix Subscriber growth.
Also, to be clear, I think Stratechery is an incredible source and usually agree with him. I don't in this case.
I wasn't trying to respond to his points more directly, I was taking on the perspective of what is good for the companies growth.
Just because you "happily enjoy ad-free Netflix, YouTube and Hulu." Doesn't mean most do (and there are strong statistical reasons that indicate that others enjoy it more as well).
Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide), and many companies have experienced what they call "demand pulled forward", i.e. extra growth in pandemic that then falls as pandemic heads towards a close. This is short term, and he has assumed that the slow in growth is the "inevitable decline" of Netflix Subscriber growth.
Also, to be clear, I think Stratechery is an incredible source and usually agree with him. I don't in this case.
I wasn't trying to respond to his points more directly, I was taking on the perspective of what is good for the companies growth.
Just because you "happily enjoy ad-free Netflix, YouTube and Hulu." Doesn't mean most do (and there are strong statistical reasons that indicate that others enjoy it more as well).
> Netflix has barely tapped its global potential (partially more and more users of countries come online world-wide)..
The problem with this argument is it is not thought through. Expanding to newer markets is not about simply enabling credit card payment from those countries.
The performance in India (not good) proved recently it is about localizing the content. Creating or buying new content for these new market costs money, and then managing those (staffing up local orgs, local production center, data center, etc.) also costs.
Netflix is in content business, unlike software it is not about making copies and distributing world wide at zero cost.
The problem with this argument is it is not thought through. Expanding to newer markets is not about simply enabling credit card payment from those countries.
The performance in India (not good) proved recently it is about localizing the content. Creating or buying new content for these new market costs money, and then managing those (staffing up local orgs, local production center, data center, etc.) also costs.
Netflix is in content business, unlike software it is not about making copies and distributing world wide at zero cost.
achow@ not sure why you think it's not thought through?
You're correct it is a content business, they just spent 17 billion on new content, far more than any other streaming provider (and have the subscribers to support it). Specifically in India, with Indian creators, and it worked. It's in their book "No Rules Rules".
You're correct it is a content business, they just spent 17 billion on new content, far more than any other streaming provider (and have the subscribers to support it). Specifically in India, with Indian creators, and it worked. It's in their book "No Rules Rules".
Netflix in India serves a niche audience. The Indian creators Netflix has brought on board so far mostly produce what's best described as prestige TV. While I've enjoyed some of these shows, they barely have a market outside of the major cities.
Netflix in India is the best example of an American company attempting to grow in India and failing because they don't have any understanding of the culture. Google, Apple, and even IKEA have figured this out. I'm sure Netflix will, too. But it'll take them a bit of time.
Netflix in India is the best example of an American company attempting to grow in India and failing because they don't have any understanding of the culture. Google, Apple, and even IKEA have figured this out. I'm sure Netflix will, too. But it'll take them a bit of time.
Markets in other countries ar also very quickly becoming saturated with local competition as well as Di$ney+ etc.
why do companies HAVE to get more subscribers?
can't companies continue to exist on the number of subscribers that they have?
can they not reduce costs -- while continuing to service that # of subscribers -- to generate better returns for their shareholders? would such actions cause shareholder/investor revolt?
why?
> the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business
how far does this go? when google or amazon or netflix or whomever has an active user account for almost all human beings on the planet, what then?
why DOES a business need to respond when their subscriber growth has passed the nadir for given market(s) at given tiers when the ROI for that business at those tiers and market volume is ~20% per quarter?
are those returns not enough? if the company (Netflix) could keep existing revenues at existing customer volumes while also reducing their infrastructure/delivery costs, would that not be enough??
would they NEED more customers?
why?
can't companies continue to exist on the number of subscribers that they have?
can they not reduce costs -- while continuing to service that # of subscribers -- to generate better returns for their shareholders? would such actions cause shareholder/investor revolt?
why?
> the slow down of subscriber growth at Netflix is pretty clear and will require a response from the business
how far does this go? when google or amazon or netflix or whomever has an active user account for almost all human beings on the planet, what then?
why DOES a business need to respond when their subscriber growth has passed the nadir for given market(s) at given tiers when the ROI for that business at those tiers and market volume is ~20% per quarter?
are those returns not enough? if the company (Netflix) could keep existing revenues at existing customer volumes while also reducing their infrastructure/delivery costs, would that not be enough??
would they NEED more customers?
why?
> how far does this go? when google or amazon or netflix or whomever has an active user account for almost all human beings on the planet, what then?
If you are not constantly growing then you will not have everyone with you, this is because new people reach adulthood. You want them in your service while still retaining the older ones.
In a steady state when all old population have your service and new ones are automatically adopting it, then you are a public utility (Ex. social security).
And when you are a public utility or essential service then you don't have to market yourself, it becomes money printing business and it is dividend company and not a stock growth one.
If you are not constantly growing then you will not have everyone with you, this is because new people reach adulthood. You want them in your service while still retaining the older ones.
In a steady state when all old population have your service and new ones are automatically adopting it, then you are a public utility (Ex. social security).
And when you are a public utility or essential service then you don't have to market yourself, it becomes money printing business and it is dividend company and not a stock growth one.
Aren't they a public company? If they don't keep growing their owners (shareholders) will be very upset and start firing people.
The company can grow their revenue without growing their users, one way to do it is ads, but there are others.
Cost cutting is always on the table, although it tends to be executed by the dreaded "MBA type" who doesn't understand product. Growth enables new feature development, cost cutting generally results in a worse product. Be careful what you wish for.
Their P/E demands it.
The day netflix starts showing ads is the day I kill my subscription to them. And I've had that subscription since they were a DVD service.
And Netflix will do the math and if losing you and people like you by selling ads makes them money they will politely show you the door.
...according to math invented by a manager with an interest in pretending that their case makes sense.
Just jiggle the projection of how many people would cancel, and whalla!! You can justify anything.
Just jiggle the projection of how many people would cancel, and whalla!! You can justify anything.
Hulu isn't ad free, it's less ads if you pay.
There is more than one tier of sub, but ad free does exist, and is explicitly called the "Hulu (No Ads)" plan.
In the US its $12.99 right now, and has been around a while: https://help.hulu.com/s/article/hulu-no-ads#hulu
They also have a $6.99 sub that does have ads, which may be what you are thinking is the only option? https://help.hulu.com/s/article/how-much-does-hulu-cost
To my knowledge no one can watch Hulu with ads and no sub like YouTube - all plans have a subscription, you just pay more to remove the ads.
In the US its $12.99 right now, and has been around a while: https://help.hulu.com/s/article/hulu-no-ads#hulu
They also have a $6.99 sub that does have ads, which may be what you are thinking is the only option? https://help.hulu.com/s/article/how-much-does-hulu-cost
To my knowledge no one can watch Hulu with ads and no sub like YouTube - all plans have a subscription, you just pay more to remove the ads.
Check out this support page: https://help.hulu.com/s/article/ads-no-commercials
> Due to streaming rights, there are a select number of shows from our streaming library that will play with a short ad break before and after each episode for Hulu (No Ads) subscribers
> Shows and movies from HBO, SHOWTIME, Cinemax, and STARZ don’t have ad breaks, but there may be promotional content before certain videos.
> Due to streaming rights, there are a select number of shows from our streaming library that will play with a short ad break before and after each episode for Hulu (No Ads) subscribers
> Shows and movies from HBO, SHOWTIME, Cinemax, and STARZ don’t have ad breaks, but there may be promotional content before certain videos.
If you actually read the support page you linked and understand what Hulu offers, its still an "ad free" Hulu service for 12.99. For almost all of the limited cases where ads do occur, its due to it being an optional external streaming service integration or "live" TV channel with their own app offering that Hulu are offering as an optional extra you can bundle in (for more $$). I can't criticise Hulu too hard for not controlling ads on live television or optional third party services you can integrate to their own app - these are almost all optional extra channels/streaming services and not part of Hulu's own shows or offering.
Almost every single streaming show from Hulu themselves without exceptions is ad-free on the 12.99 plan, exactly as the plan name says. In addition to understanding the support page, I use the service and the no-ad plan almost every day in my own home, it's definitely a thing and works exactly as its name (no ads!) suggests. Its probably why it's called the "no ads" plan...
Almost every single streaming show from Hulu themselves without exceptions is ad-free on the 12.99 plan, exactly as the plan name says. In addition to understanding the support page, I use the service and the no-ad plan almost every day in my own home, it's definitely a thing and works exactly as its name (no ads!) suggests. Its probably why it's called the "no ads" plan...
> Almost every single streaming show from Hulu themselves without exceptions is ad-free
Thats almost ad-free not ad-free.
Thats almost ad-free not ad-free.
> In credit to YouTube and Hulu, they give you the option to go ad free
Not entirely, though, for YouTube because paying doesn't remove the "And here's a word from our sponsor" segments that people are now using instead of ad breaks, right?
Not entirely, though, for YouTube because paying doesn't remove the "And here's a word from our sponsor" segments that people are now using instead of ad breaks, right?
[deleted]
Yeah but that's what https://sponsor.ajay.app/ is for.
>In credit to YouTube and Hulu, they give you the option to go ad free...
Unless something has changed and I'm unaware, this is not entirely true for Hulu. I've been paying for that plan for years and they definitely still play ads for select shows.
Edit: I think it has something to do with it being a network show that Hulu hosts the day after it airs on cable, or something, but they're definitely still there.
Unless something has changed and I'm unaware, this is not entirely true for Hulu. I've been paying for that plan for years and they definitely still play ads for select shows.
Edit: I think it has something to do with it being a network show that Hulu hosts the day after it airs on cable, or something, but they're definitely still there.
why don't they just stop hiring and enjoy the free money? as long as people aren't unsubbing, they're fine, no? why do companies always have to grow, even to the detriment of the service they're trying to offer? everything becomes shit eventually and then opens the door for the next hot thing that hasn't yet been tainted
It is also non-trivial to implement in a way that supports older devices; I can't watch ad-supported prime video channels on my BluRay player, which is rather annoying.
The only thing that grows without limits in nature is a malign tumor and that usually kills the host.
Yet for some reason regarding business and economy unlimited growth is the holy grail.
Regarding the topic: Sure, do it... I'll gladly move on to some other service. I may be one of the few people actually doing this, but worry not, I don't care for what others do with regards to my decisions.
Apart from that there is more and more content on Netflix I am not even slightly interested, all that reality show bullshit that creeps in... brrrr
Yet for some reason regarding business and economy unlimited growth is the holy grail.
Regarding the topic: Sure, do it... I'll gladly move on to some other service. I may be one of the few people actually doing this, but worry not, I don't care for what others do with regards to my decisions.
Apart from that there is more and more content on Netflix I am not even slightly interested, all that reality show bullshit that creeps in... brrrr
First the streaming vendors compete for users, then, as the market is getting saturated (no more users left for subscriptions), they start competing for ads. And then users start cancelling, because of too many or irrelevant ads. It's a vicious cycle, the never-ending story of how the ads industry poisons other markets.
There are users. The issue is the service. In DE there are almost no politically incorrect movies on Netflix. The quality of video is bad ( with HD and good internet connection), STNG not available STDS9 available in MPEG1 quality ( though MPEG 1 is sharper) and the sound is just terrible. Why pay for something like this ? And now ads ? So they want more money but the only evolution of the service is from crap to crappier ?
The quality issue you describe is often because there's simply no higher quality available. Even on DVDs you'll find similar quality video.
Availability issues are often because companies have paid big bucks for long term distribution rights within a geographical area. In this specific instance it could also be Paramount screwing you over like Disney did when they launched their own competitor.
Years ago, my Netflix subscription drastically reduced the amount of shows I pirated. As the streaming industry started to develop and more and more studios pull their content or try to get people to pay for their own special Netflix, I'm finding myself using Sonarr more and more.
Like Steam and Spotify, Netflix solved the accessibility and availability problem. Now the media industry is trying its hardest to undo that and make steaming unnecessarily burdensome again. Their short term profits are ruining their business model once again and when this system eventually collapses, the media companies will complain about piracy once again.
Availability issues are often because companies have paid big bucks for long term distribution rights within a geographical area. In this specific instance it could also be Paramount screwing you over like Disney did when they launched their own competitor.
Years ago, my Netflix subscription drastically reduced the amount of shows I pirated. As the streaming industry started to develop and more and more studios pull their content or try to get people to pay for their own special Netflix, I'm finding myself using Sonarr more and more.
Like Steam and Spotify, Netflix solved the accessibility and availability problem. Now the media industry is trying its hardest to undo that and make steaming unnecessarily burdensome again. Their short term profits are ruining their business model once again and when this system eventually collapses, the media companies will complain about piracy once again.
> The quality issue you describe is often because there's simply no higher quality available
Netflix in Germany sends audio in 64 or 96kbps for stereo and 192kbps for 5.1
Video quality is just as bad.
Netflix in Germany sends audio in 64 or 96kbps for stereo and 192kbps for 5.1
Video quality is just as bad.
DS9 is only available in SD. It was never remastered into HD like TOS and TNG were (if I recall correctly TNG ended up losing money and that had far less VFX that needed re-rendering than DS9 does). Netflix almost certainly wouldn't be serving any video in MPEG1 (not even SD content) because it's poorly optimized for internet connections. If the original sources are MPEG1 then they'll have re-encoded them into into another format.
Also the issue with some shows not being available in some regions is a licensing problem. You need to take that complaint with the studios rather than Netflix. They would much prefer to do away with the problem of localized licensing deals.
Also the issue with some shows not being available in some regions is a licensing problem. You need to take that complaint with the studios rather than Netflix. They would much prefer to do away with the problem of localized licensing deals.
>In DE there are almost no politically incorrect movies on Netflix.
Are there any in other regions? Can you give some examples?
Are there any in other regions? Can you give some examples?
DS9 was never remastered to HD like TNG was. The quality of DS9 you're getting is the best quality that exists.
Also this has nothing to do with codec; Netflix doesn't send anything using MPEG1, as it's an old, inefficient codec.
Also this has nothing to do with codec; Netflix doesn't send anything using MPEG1, as it's an old, inefficient codec.
I agree. Netflix should sell ads.
But...
They should play them after you've watch an episode of something, and the "Play next episode" button should immediately skip the ad. The ad volume should be normalized to the same as the episode (or lower), and the ads should have to match the same production specifications as Netflix shows. They should be like small, very short, unobtrusive films that advertise something.
So long as I remain in control of what I'm watching, I don't have to watch an ad to access content, the ad is high quality, and the ad comes after the thing I chose, then I'd accept ads on Netflix in the same way I would accept a trailer for a Netflix show.
I imagine that bar is probably set too high though.
But...
They should play them after you've watch an episode of something, and the "Play next episode" button should immediately skip the ad. The ad volume should be normalized to the same as the episode (or lower), and the ads should have to match the same production specifications as Netflix shows. They should be like small, very short, unobtrusive films that advertise something.
So long as I remain in control of what I'm watching, I don't have to watch an ad to access content, the ad is high quality, and the ad comes after the thing I chose, then I'd accept ads on Netflix in the same way I would accept a trailer for a Netflix show.
I imagine that bar is probably set too high though.
If I see a netflix ad I cancel. Just like I did with hulu+ (the paid service), no way am I going to pay a video streaming to waste my time and bandwidth with ads.
Similarly first time I see a youtube ad, I'll cancel my youtube premium subscription.
Similarly first time I see a youtube ad, I'll cancel my youtube premium subscription.
I agree. Yet I feel compelled to say that the HN crowd is not necessarily representative of the general population. I've missed out on some great ideas I thought were dumb because I made the mistake of thinking my brain and interests are similar to others'.
I feel compelled to say that tech interest has nothing to do with hating advertising and wanting content now.
If anything the need for piracy or ad blocking led to a lot of people learning tech skills they would otherwise be completely uninterested in.
If anything the need for piracy or ad blocking led to a lot of people learning tech skills they would otherwise be completely uninterested in.
If about 33% of the users on the WWW use an adblocker, then its likely a considerable amount of them like convenient streaming without ads.
Netflix already contains advertising, btw. Its content does, such as product placement (a good example of which being Nokia in the original The Matrix though not Netflix specific). Heck, even Disney+ is advertising: for their merchandise. My kid digs 'Mini Mouse'.
What I am not interesting in is wasting my time on ads. I sort of accept it on Prime because I got Prime cheap, and its Prime Video products only. They're testing my limits though, I can tell you that much, and I can also tell you the ads are usually not appropriate for me (although I do have Prime for the Prime specific content, I find it on my own). The moment Netflix starts to waste my time with ads, it becomes less valuable. Because ads is the reason I avoid cable TV. I CBA with wasting my time on BS I don't want (to see). Its the reason I got Netflix in the first place. It makes the product less convenient, and pirating is already very convenient. It just feels better to pay for something while watching the people you paid for acting.
Netflix already contains advertising, btw. Its content does, such as product placement (a good example of which being Nokia in the original The Matrix though not Netflix specific). Heck, even Disney+ is advertising: for their merchandise. My kid digs 'Mini Mouse'.
What I am not interesting in is wasting my time on ads. I sort of accept it on Prime because I got Prime cheap, and its Prime Video products only. They're testing my limits though, I can tell you that much, and I can also tell you the ads are usually not appropriate for me (although I do have Prime for the Prime specific content, I find it on my own). The moment Netflix starts to waste my time with ads, it becomes less valuable. Because ads is the reason I avoid cable TV. I CBA with wasting my time on BS I don't want (to see). Its the reason I got Netflix in the first place. It makes the product less convenient, and pirating is already very convenient. It just feels better to pay for something while watching the people you paid for acting.
> If about 33% of the users on the WWW use an adblocker, then its likely a considerable amount of them like convenient streaming without ads.
I think WWW and streaming ads are too different to allow much meaningful cross inference.
On a web page with ads the ads are visible while you are trying to read the content, sometimes even overlaying it, and sometimes making noise and playing distracting animations.
On streaming (and on broadcast) the ad breaks usually alternate with the content or occur between acts in the content. When the content is actually playing the ads are not there.
This makes a huge difference. When an ad comes on between acts in a show, I simply pick up a book or my iPad until the next act starts in the show. I've always got things I want to do that I can make progress on in 2 or 3 minute segments so it is no big deal.
I think WWW and streaming ads are too different to allow much meaningful cross inference.
On a web page with ads the ads are visible while you are trying to read the content, sometimes even overlaying it, and sometimes making noise and playing distracting animations.
On streaming (and on broadcast) the ad breaks usually alternate with the content or occur between acts in the content. When the content is actually playing the ads are not there.
This makes a huge difference. When an ad comes on between acts in a show, I simply pick up a book or my iPad until the next act starts in the show. I've always got things I want to do that I can make progress on in 2 or 3 minute segments so it is no big deal.
The whole appeal of 'cutting the cord' was that you got better stuff at a lower price than cable. Netflix is now pricier than it used to be, and streaming bundles have arrived. Should ads come to Netflix, it's obvious to pretty much anyone that streaming has become what it was supposed to replace.
While I agree, the world would probably better off if it was the case. I think back to a very popular comment about how Dropbox can be simplified to a few shell commands over FTP. There's simply too much useless software out there not solving real human problems.
Totally agree. I am paying to _not_ see ads. If they show me ads anyway I simply won't use the service.
Ads are only acceptable to me for purely ad-supported services.
If I have to reach for my credit card to view your content, you have to put the ads away. There is no in between for me. If you pull out ads on me, I will drop your service.
If I have to reach for my credit card to view your content, you have to put the ads away. There is no in between for me. If you pull out ads on me, I will drop your service.
> Similarly first time I see a youtube ad, I'll cancel my youtube premium subscription.
Youtube has ads for the lower tiers, yet you’re still subscribed.
This article is explicitly not arguing that Netflix should show ads to existing subscribers like yourself.
Youtube has ads for the lower tiers, yet you’re still subscribed.
This article is explicitly not arguing that Netflix should show ads to existing subscribers like yourself.
It’s only arguing to not show ads to the highest tiers, and to bump those prices as well as they introduced a new benefit (“no ads”).
Highest tiers being the current tiers.
The article also argues that Netflix is constantly bumping up their prices, and this would further justify that by making the higher tiers seem more attractive.
The article also argues that Netflix is constantly bumping up their prices, and this would further justify that by making the higher tiers seem more attractive.
Some of us would like some silence when a movie or an episode finishes. Currently, the auto playing of trailers is bad enough as it is.
You can turn it off somewhere in profile settings on netflix.com
I've found it to be very inconsistent. I've found that typically episodes will play credits and not auto-forward to the next episode. Movies will sometimes skip credits and move to trailers, sometimes not. I feel like usually they move to trailers. And movies is when I MOST want to watch credits and reflect on the movie, so Netflix is literally doing the opposite of what I want.
Not really.
You can turn off auto-skipping to next episode, but depending on the platform you are watching on, it might still autopay trailers after a movie has finished.
You can turn off auto-skipping to next episode, but depending on the platform you are watching on, it might still autopay trailers after a movie has finished.
Of course, but Netflix itself isn't really designed for that use case. The job of Netflix is to make content you want to watch, not to silence itself so you get some peace.
In your situation I'd use the sleep timer setting on the TV itself to automatically turn it off after a given time. It shouldn't be too hard to align it to match the end of the show.
In your situation I'd use the sleep timer setting on the TV itself to automatically turn it off after a given time. It shouldn't be too hard to align it to match the end of the show.
lolwut
the job of Netflix is to provide a product its customers want. i don't think OP is in a tiny minority of people who want an option to disable autoplay; it's a desire i've heard expressed quite often. hell, fucking YouTube, a service that exists to play ads and that plays more as you watch more videos, has an option to disable autoplay
Netflix gets away without doing this because it doesn't immediately lose them customers, and implementing it wouldn't really gain them any, but i am always quite at people who declare that it's therefore good. i need to figure out some tech service that's growth positive as a function to sacrificing its users' children to Moloch, just to watch the HN crowd cry "well, it's not the service's job to /not/ sacrifice your children to Moloch, and you can put them in an anti-Moloch safe room, so I personally don't see why they shouldn't keep sacrificing to Moloch the children of those that don't bother to go the extra mile to avoid it"
the job of Netflix is to provide a product its customers want. i don't think OP is in a tiny minority of people who want an option to disable autoplay; it's a desire i've heard expressed quite often. hell, fucking YouTube, a service that exists to play ads and that plays more as you watch more videos, has an option to disable autoplay
Netflix gets away without doing this because it doesn't immediately lose them customers, and implementing it wouldn't really gain them any, but i am always quite at people who declare that it's therefore good. i need to figure out some tech service that's growth positive as a function to sacrificing its users' children to Moloch, just to watch the HN crowd cry "well, it's not the service's job to /not/ sacrifice your children to Moloch, and you can put them in an anti-Moloch safe room, so I personally don't see why they shouldn't keep sacrificing to Moloch the children of those that don't bother to go the extra mile to avoid it"
It is totally way too hard to align those things.
Most sleep timers works in hours, maybe half hour increment. Looking up the length of a show, estimating when Netflix will interrupt end-credits, is completely unreasonable workaround.
Most sleep timers works in hours, maybe half hour increment. Looking up the length of a show, estimating when Netflix will interrupt end-credits, is completely unreasonable workaround.
Netflix is full of ads, but you’re so used to them you don’t see them. I can’t remember what it was I watched the other night, but I definitely noticed the 45 second sequence of cereal box, bowl of cereal, cereal box, bowl of cereal, character going “mmm it’s delicious”, cereal box, end scene - and this is just one of many examples. Next Netflix production you watch, pay attention for the placements - there are a lot. Some subtle. Some as subtle as a hammer to the forehead.
Youtube started with no ads, then ads at the end, then ads at the beginning, then ads randomly inserted in the middle.
It's like the income tax. First for only the wealthy, then the tax "trickles down" to everyone.
It's like the income tax. First for only the wealthy, then the tax "trickles down" to everyone.
Time to update the quote?
"In this world nothing can be said to be certain, except death, taxes and ads."
"In this world nothing can be said to be certain, except death, taxes and ads."
YouTube on desktop with an ad blocker is glorious. (Well as glorious as the intrinsically crappy content itself can be).
Better use another another frontend, to avoid all the issues and bugs of YouTube's video player and avoid loading tons and tons of unnecessary crap.
I've been paying for YouTube Premium ever since it became an option, it's basically the only way YouTube is tolerable. It's by fare the subscription I'm getting the most benefit from. If it was not available, my YouTube consumption would drop to damn near zero. When I see other browse YouTube with ads it feels like you're going mad, it's absolutely infuriating to witness.
It's difficult for me to see Netflix as being any different. I'm already not getting that much value from the service, so why should I pay if there where ads?
One fact which is often overlooked in the non-US markets is the lack of ads. For a service like YouTube, it's the same five ads over and over. There simply isn't enough inventory in the ad space to supply something like Netflix.
It's difficult for me to see Netflix as being any different. I'm already not getting that much value from the service, so why should I pay if there where ads?
One fact which is often overlooked in the non-US markets is the lack of ads. For a service like YouTube, it's the same five ads over and over. There simply isn't enough inventory in the ad space to supply something like Netflix.
And ofcourse, most importantly, Netflix (or Disney or Prime or Max) with ads should be free (or really, really cheaper). With internet streaming, we consumers pay for the bandwidth to use any streaming service. And so if Netflix or Disney want to waste my bandwidth with ads, they better be willing to compensate me for it.
I asked my wife to cancel Hulu live recently because it was $85 USD/month with ads. Insane. She has one or two shows she likes to watch live so I suggested Sling Blue instead. Sling is OK for live stuff but anything on-demand is completely obnoxious with ads. We tried to watch an episode of Atlanta the other day and Sling injected more ads than the length of the show, eg it was longer than 30 minutes of ads to get through the 30 minute show. The inevitable that everyone said was going to happen is finally a reality - streaming platforms are back to where cable was 20 years ago.
> With internet streaming, we consumers pay for the bandwidth to use any streaming service. And so if Netflix or Disney want to waste my bandwidth with ads, they better be willing to compensate me for it.
You pay for electricity and TV companies have never compensated you for the electricity used during their commercials.
There are lots of occasions that we don't get compensated for things that have costs. For example, let's say you're driving in traffic. There's a stop light. Two cars from the other direction turn onto your street after their light has turned red ("it's been yellow for 3 seconds, but I don't wanna wait"). Your light turns green and a couple cars get through, but you have to wait another light cycle because of those two cars that illegally ran the red light. That's another minute or two of idle fuel usage. You don't get compensated for that and what the other drivers did was illegal. At least with Netflix you'd be agreeing to the ads and a price with a very real option of just not subscribing.
There are so many things that you pay for that you don't get compensated for in that micro-accounting way. Heavier vehicles destroy roads requiring them to be repaved a lot more, but the drivers of those heavier vehicles don't pay for that. We all do. It costs way more to deliver things to people in rural areas, but the USPS and many online stores will charge the same shipping for someone in Alaska or rural Montana as someone in NYC despite the fact that the person in Alaska might be only accessible by air and the person in rural Montana might be the only person receiving a package for 5 miles. They might be using $1 worth of fuel just on the end delivery for one person in an area like that, never mind the amount of time that it takes to deliver the packages in such a rural area. ($4/gallon of gas, 20 MPG fuel economy, and a 5 mile distance would be $1)
I'm not sure what your situation is (maybe you're on a really bandwidth restricted connection like HugesNet), but "we consumers pay for the bandwidth" is probably one of the smallest pieces of this world to worry about getting compensated for.
You pay for electricity and TV companies have never compensated you for the electricity used during their commercials.
There are lots of occasions that we don't get compensated for things that have costs. For example, let's say you're driving in traffic. There's a stop light. Two cars from the other direction turn onto your street after their light has turned red ("it's been yellow for 3 seconds, but I don't wanna wait"). Your light turns green and a couple cars get through, but you have to wait another light cycle because of those two cars that illegally ran the red light. That's another minute or two of idle fuel usage. You don't get compensated for that and what the other drivers did was illegal. At least with Netflix you'd be agreeing to the ads and a price with a very real option of just not subscribing.
There are so many things that you pay for that you don't get compensated for in that micro-accounting way. Heavier vehicles destroy roads requiring them to be repaved a lot more, but the drivers of those heavier vehicles don't pay for that. We all do. It costs way more to deliver things to people in rural areas, but the USPS and many online stores will charge the same shipping for someone in Alaska or rural Montana as someone in NYC despite the fact that the person in Alaska might be only accessible by air and the person in rural Montana might be the only person receiving a package for 5 miles. They might be using $1 worth of fuel just on the end delivery for one person in an area like that, never mind the amount of time that it takes to deliver the packages in such a rural area. ($4/gallon of gas, 20 MPG fuel economy, and a 5 mile distance would be $1)
I'm not sure what your situation is (maybe you're on a really bandwidth restricted connection like HugesNet), but "we consumers pay for the bandwidth" is probably one of the smallest pieces of this world to worry about getting compensated for.
You cleverly avoid the fact that many of us also don't pay cable tv providers the equivalent of what we pay our electric providers. Internet streaming providers on the other hand already charge us as much, or even more than what we pay for our internet service.
I think people are missing the suggestion of this article. It's not suggesting that Netflix adds advertising to the existing subscriptions; it's suggesting they add a lower-priced subscription supported by ads.
>...it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers).
If they kept the existing $10/$15.50/$20 plans the same (https://help.netflix.com/en/node/24926), but they add a $5 ad-supported subscription, that's not changing anyone's experience, unless they choose to switch.
>...it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers).
If they kept the existing $10/$15.50/$20 plans the same (https://help.netflix.com/en/node/24926), but they add a $5 ad-supported subscription, that's not changing anyone's experience, unless they choose to switch.
Everyone's experience changes when a company begins to consider ad revenue.
How those changes shake out is hard to predict. It's not a stretch to suggest that even little things change for everyone though. Adding ad revenue changes how a company thinks about nearly everything, whether they're aware of it or not, and ultimately the end user suffers.
For example, Netflix would likely start trying to tweak content discovery in a way that benefits advertisers. Rather than show me content that matches my historical interests, they show me content that optimizes ad revenue as well. It's unlikely they'd maintain two different "ad-free" and "ad-full" recommendation algorithms.
Motivated by pressure from advertisers, Netflix might be less inclined to produce or provide content that made advertisers uncomfortable or benefitted an advertiser's competitors.
When producing content, they now have two bosses: subscribers, and advertisers. Both have entirely different expectations. Those expectations push Netflix into making compromises, and rarely do those compromises produce outcomes that are better than if they only focused on making one side happy.
How those changes shake out is hard to predict. It's not a stretch to suggest that even little things change for everyone though. Adding ad revenue changes how a company thinks about nearly everything, whether they're aware of it or not, and ultimately the end user suffers.
For example, Netflix would likely start trying to tweak content discovery in a way that benefits advertisers. Rather than show me content that matches my historical interests, they show me content that optimizes ad revenue as well. It's unlikely they'd maintain two different "ad-free" and "ad-full" recommendation algorithms.
Motivated by pressure from advertisers, Netflix might be less inclined to produce or provide content that made advertisers uncomfortable or benefitted an advertiser's competitors.
When producing content, they now have two bosses: subscribers, and advertisers. Both have entirely different expectations. Those expectations push Netflix into making compromises, and rarely do those compromises produce outcomes that are better than if they only focused on making one side happy.
Well put. Not to mention that once the platform and business support ads, it's a slippery slope. No ads on the top tier quickly becomes "We'll just show limited ads to the top tier to make up this quarter's shortfall," and so on from there.
This is a fair critique!
It's just more nuanced than "I don't want to watch shows with ads".
It's just more nuanced than "I don't want to watch shows with ads".
> It's just more nuanced than "I don't want to watch shows with ads".
Nevertheless valid I think. In subscribing to Netflix (or continuing to do so in my case) the absence of ads has to be one of the considerations.
Nevertheless valid I think. In subscribing to Netflix (or continuing to do so in my case) the absence of ads has to be one of the considerations.
And we'll being going to piracy if we had to watch ads on top of paying a monthly fee. This would be ridiculous. There's advertising almost everywhere else. Why do we need more advertising?
Pretty sure the advertising industry won't be happy until every human on the planet is required by law to tolerate 24/7 advertising beamed directly into their brains.
I'd wager most people here are aware of what happens when advertising enters the conversation.
Just adding one thing: Some Netflix productions already contain product placements. The Tinder Swindler is a giant Google + Apple ad.
Many Korean series on Netflix (including ones branded as Netflix Originals, though they may only show that outside of their home region) that are set in the modern day include product placement, as of course do plenty of Hollywood feature films included on Netflix.
Now, presumably, Netflix doesn't take a cut of those today. Wouldn't be a stretch to imagine using product placement to offset the cost of producing Netflix Originals in the future, though.
Now, presumably, Netflix doesn't take a cut of those today. Wouldn't be a stretch to imagine using product placement to offset the cost of producing Netflix Originals in the future, though.
The trouble is advertisers aren't very interested in people who can only afford the lowest tier. Somebody who can only afford that isn't going to be in the market for a Tesla or MacBook or any other product.
The people who can afford the tier without advertising are exactly the people advertisers want to target.
The people who can afford the tier without advertising are exactly the people advertisers want to target.
Not necessarily; there's a depressingly large group of people who have terrible control over their finances and are poor because they're easily influenced into buying expensive items. Definitely not the main source of poverty, but a great target audience for advertisers to manipulate.
And they want to not be advertised to, so the power move would be to:
1) Advertise "ad-less" platforms to them that contain subtle advertisements for expensive but effective ad-blocker systems - even augmented reality systems that can block most billboards etc.
2) Have a controlled arms race where ads get even more egregious and bypass the old ad blockers. Sell new ones etc.
3) Add really powerful, comprehensive features to ad blocker systems that absolutely beat all the ads, but they only perform well when integrated with new, up-to-date apple and tesla products.
1) Advertise "ad-less" platforms to them that contain subtle advertisements for expensive but effective ad-blocker systems - even augmented reality systems that can block most billboards etc.
2) Have a controlled arms race where ads get even more egregious and bypass the old ad blockers. Sell new ones etc.
3) Add really powerful, comprehensive features to ad blocker systems that absolutely beat all the ads, but they only perform well when integrated with new, up-to-date apple and tesla products.
No! At any freaking tier. What stops them from starting to sell data from other tiers? It will become part if their business model and will eat away everything they do, including content creation. Put that cancer back in pandora's box please!
That doesn't jive with any subscription plan I've seen from any of these companies. Far more likely that they jack up the rates on the pure subscription plans and then carve out a slightly lower priced tier with ad support.
This doesn't solve the paid vs ad supported conundrum. The ads produce lesser revenue when targeting leaner wallets. It can kill the brand and not produce significant revenue like YouTube.
Yeah totally! This guy who writes tech/sv vc content totally knows better than a multi-billion dollar industry leader who pioneered their business model on what they should do amirite? /s
What this post misses is that there are a few people that will pay extra not to have commercials. So when Netflix starts to add ads to their offerings, and they will, they will have 2 tiers. A lower cost with commercials and the higher one with no commercials. It's the only way they can increase their earnings growth while keeping the subscription cost relatively low. I predict that with in 2 years we will see a Netflix with commercials.
> What this post misses is that there are a few people that will pay extra not to have commercials.
And there are also people who will go back to using BitTorrent to not have commercials.
I wonder how the economics will work out there?
I'm currently paying for 4 streaming services because of how they've siloed various shows off. It'd probably only take one of them to start playing shitty broadcast tv style ads during things I'm watching for me to rage quit them all, and go back to downloading everything I watch and using shared Emby servers between a few friends.
And there are also people who will go back to using BitTorrent to not have commercials.
I wonder how the economics will work out there?
I'm currently paying for 4 streaming services because of how they've siloed various shows off. It'd probably only take one of them to start playing shitty broadcast tv style ads during things I'm watching for me to rage quit them all, and go back to downloading everything I watch and using shared Emby servers between a few friends.
I'm right there with you.
I hate the advertising industry.
Advertisements are a service-killer for me, and when that happens I'll also share my ad-free files with everyone I know.
I hate the advertising industry.
Advertisements are a service-killer for me, and when that happens I'll also share my ad-free files with everyone I know.
I remember when Google had two, context relevant ads on the top of their searches. They were clearly marked as such and I could ignore them or use them if they looked intriguing. This has never been the case since. That industry is just out there trying to scam publishers, advertisers and users. It's horrific.
If Netflix had ads on top of the monthly service charge I'd cancel immediately. I stopped using YouTube on any device other than my Linux box where I can adblock everything.
If Netflix had ads on top of the monthly service charge I'd cancel immediately. I stopped using YouTube on any device other than my Linux box where I can adblock everything.
This article does not suggest that Netflix should ever show ads to you, an existing customer.
It suggests that Netflix should offer an ad-supported plan for people unwilling to pay current prices.
It suggests that Netflix should offer an ad-supported plan for people unwilling to pay current prices.
Why would they grandfather in existing subscribers though, that's not gonna happen.
The article specifically argues that they should do this in order to further grow their customer base, and retain customers that are unwilling to pay current prices.
Why couldn’t they keep existing subscribers ad-free? Those people are currently paying huge subscription fees.
Why would it be impossible for Netflix to implement advertising in the way this article suggests?
Why couldn’t they keep existing subscribers ad-free? Those people are currently paying huge subscription fees.
Why would it be impossible for Netflix to implement advertising in the way this article suggests?
Of course it's not impossible, they could do it if they wanted to, but that's not what would happen. That's not how anyone does it. Inevitably they would add ads at approximately the current price, and raise the price of the ad-free tier.
Spotify seems to have been successfully doing it as described for many years now, no?
That sounds great for everyone but the Netflix consumer.
First, who cares? This article isn’t about the consumers. Perhaps it would be great for the Netflix consumer if Netflix became a nonprofit?
Second, why? Why would this be bad for the Netflix consumer. Consumers willing to pay current sub fees shouldn’t be affected, and those unwilling to pay current prices would be able to access Netflix for less money.
This would obviously benefit consumers with less disposable income.
Second, why? Why would this be bad for the Netflix consumer. Consumers willing to pay current sub fees shouldn’t be affected, and those unwilling to pay current prices would be able to access Netflix for less money.
This would obviously benefit consumers with less disposable income.
c0nducktr(2)
What sorts of advertisers buy slots that only target consumers with less than a few dollars of disposable income per month?
Sadly, Amazon has the right idea here. Prime Video is (effectively) free, and a big chunk of the premium back catalog sits in IMDB TV, where ads are mandatory.
Sadly, Amazon has the right idea here. Prime Video is (effectively) free, and a big chunk of the premium back catalog sits in IMDB TV, where ads are mandatory.
It's very ironic because a lot of people paid for Netflix to "cut the cable" and not get commercials in the first place. Now you're saying they have to pay for that yet again?!
The post doesn't miss that. The post is about that.
They can also switch to "premium" content, which you pay extra for.
Disney Hotstar in my country already does this.
As other commenters out this seems like horribly short term thinking. The reason I subscribe to Netflix and Amazon prime and NOT to Hulu or YT is because Hulu has ads (prime has internal ads I suppose, but I’ve always been able to skip those unlike YouTube).
I understand content generation is expensive. Maybe Netflix needs to expand more on the IPs they currently own? Merchandising and such (how about a LEGO/Stranger Things crossover anyone?) Differential pricing models for other countries would make sense too. I’m sure the board has thought of all of these and none are particularly easy, but putting ads where they don’t belong would ruin their brand.
I understand content generation is expensive. Maybe Netflix needs to expand more on the IPs they currently own? Merchandising and such (how about a LEGO/Stranger Things crossover anyone?) Differential pricing models for other countries would make sense too. I’m sure the board has thought of all of these and none are particularly easy, but putting ads where they don’t belong would ruin their brand.
Both Hulu and YT have premium (mostly) ad-free experiences. I say mostly as the line gets a little blurry with cross promotion of other shows on the same service.
Yeah and I think this blurred line of ads vs no ads damaged their brands at the onset as now I associate them with old school cable tv, which is what I was trying to escape.
I think ads would kill Netflix, if it has ads it's not better than youtube or tv catch-up.
Honestly what I think they should do is add micro-transactions. Introduce netflix points, which can be used to do things like skip the wait on shows released weekly. Watch new netflix movies ahead of the rest of the subscribers, etc.
The marketing challenge would be to pass it of as getting perks instead of penalizing the rest of the subscribers, the easiest way to do that would be to include a small number of netflix points in the standard subscriptions.
It could work like you can watch up to episode 5 this week and wait one week for episode 6 or pay 1 netflix point per episode to watch the rest now. You can buy 1 netflix point for 1 dollar and everybody gets one every month as part of their subscription.
Honestly what I think they should do is add micro-transactions. Introduce netflix points, which can be used to do things like skip the wait on shows released weekly. Watch new netflix movies ahead of the rest of the subscribers, etc.
The marketing challenge would be to pass it of as getting perks instead of penalizing the rest of the subscribers, the easiest way to do that would be to include a small number of netflix points in the standard subscriptions.
It could work like you can watch up to episode 5 this week and wait one week for episode 6 or pay 1 netflix point per episode to watch the rest now. You can buy 1 netflix point for 1 dollar and everybody gets one every month as part of their subscription.
…Make people watch shows they think should be doing better (but no one seems to watch them) to get points.
Thanks I hate it.
Thanks I hate it.
They could also work as votes, as in please don't cancel this show I love that no one else watches.
The second Netflix introduces Ads, I'll drop my subscription and go back to the Bay + Torrent - I own a VPN already.
The issue is, that at this point in time, Netflix will become a greedy data monster like Google and try its best to profile me to "improve my ad experience". Thanks, but no thanks. VLC does not profile me when I watch a pirated show.
The issue is, that at this point in time, Netflix will become a greedy data monster like Google and try its best to profile me to "improve my ad experience". Thanks, but no thanks. VLC does not profile me when I watch a pirated show.
Same, I like their service but I'd instant drop. Have you try watching TV those days ?
[deleted]
If Netflix introduced ads I'd cancel immediately, even if my paid plan didn't show me those ads.
At the end of the day, after the "Tech disruption" stage of online streaming I think we're going to eventually move back to a point where the focus of the tv industry is back to extracting value. That's what drove the cable TV bundles, and that's what will happen with Streaming once the dominant players are stable. Netflix is reaching the point of stability, some others haven't yet - and those that haven't will either stabilize or go out of business and get bought up by their competitors. The key there is market segmentation. So yes, there will be a thousand different ways including Ads to extract the maximum cash out of every individual customer. That'll be Ads, it'll be paid early releases, it'll be extra subscriptions for Sports and live events, it'll be geo-gating content. It's not complicated, cable TV has been doing it for decades. Once Netflix subscriber count cools, that'll be the only direction left to head, and it'll be really obvious what to do because they know what Cable TV has been doing for decades.
Oh and you don't need to pay silicon valley software engineer prices to do any of that.
Oh and you don't need to pay silicon valley software engineer prices to do any of that.
An ad subsidized pricing level would be OK, but if you think I'm paying $21/mo and watching ads, you won't see me for dust.
The lack of ads is the #2 USP after good content
The lack of ads is the #2 USP after good content
You know what doesn't have ads? Pirated content.
Unfortunately, even this changes. Lots of uploaders add subtitles, that pop up 2-3 times during a show "To download more movies, visist our site XXXX".
Did you just compare a Video Advertisement which takes over the whole screen to a 2-3 second Subtitle Ad which happens at the end of the movie ?
Well, it all starts somewhere. I am old enough to remember when private TV started in Germany in the 80s/90s - a 90 minute movie had exactly one ad break of 2-3 minutes. From there it "evolved" into 3-4 ad breaks, overlay ads mid-show, plus HbbTV overlay.
Same holds true for the Internet. In the 90s, there were 1-2 banners (animated GIFs), tops. It also evolved into intrusive tracking ads with flashy videos, sound etc.
My thesis is: Because you always get used to the ads and start to sub-concisely ignore them, they get more and more obtrusive to counter that effect. Its a race to the bottom, and my observations that I described above back this thesis.
Same holds true for the Internet. In the 90s, there were 1-2 banners (animated GIFs), tops. It also evolved into intrusive tracking ads with flashy videos, sound etc.
My thesis is: Because you always get used to the ads and start to sub-concisely ignore them, they get more and more obtrusive to counter that effect. Its a race to the bottom, and my observations that I described above back this thesis.
To be fair there are plenty of piracy sites that do include ads on the web page.
HN crowd uses Ad-blocker.
I will cancel my Netflix subscription immediately after seeing first commercial. I can tolerate ads on prime because I get prime video as a bundle and because they only advertise their own content but Netflix is a different story. Selling ads is slippery slop, it ruins core product. Just look at TV programming or latest google search results
Indeed the fact that prime only advertises other shows on prime is really the only reason I tolerate their ads.
Did you read the article or just the headline? It doesn’t suggest that Netflix should show you ads.
Adverts are slippery slop indeed.
I have been increasingly disgruntled by netflix lately.
- The app on my laptop will stop working when I move it to my big screen over miracast.
- The content here(UK) seems very limited, I feel I have watched everything watchable.
- The video quality in the browser is shit.
- It feels like the UI is fighting against me when I am trying to find content to watch (this might be because there is not a lot of content).
If they add ads I will just drop them on the spot.
- The app on my laptop will stop working when I move it to my big screen over miracast.
- The content here(UK) seems very limited, I feel I have watched everything watchable.
- The video quality in the browser is shit.
- It feels like the UI is fighting against me when I am trying to find content to watch (this might be because there is not a lot of content).
If they add ads I will just drop them on the spot.
Do that and I will end my Netflix subscription.
Ads were identified as a way to pay for free broadcast of TV or the reduce the cost of subscriptions for users. If I'm paying a subscription fee for streaming, I expect that part of the service I'm buy is the ability to enjoy my content free of distraction from ads.
There are two main reasons for this:
1. They waste my time 2. It encourages the further invasionsions of technology tracking
The first one should be relatively self evident. The second is more isideous, and one that I'm more concerned about in the long term. Streaming services selling adds will mean the creation of technology to further push tracking of whomever is view the content into the devices that they stream from: computers, tablets, phones, and TVs.
When I'm watching a show after a long day at work, I don't want to have to worry about whether my TV is tracking what I watch, etc. This technology is already being developed by smart tv manufacturers, for example, and already exists for the computer devices. And while ad brokers and clearinghouses definitely want tracking technology in every aspect of our lives, I'm getting fatigued by it all and want some portions of my life safe from the collection and sale of that information.
If I'm the product that these companies are selling, and the shows I'm watching are the "bait" to get me to agree with that (this is what print media became), then don't charge me, and tell me that.
There are two main reasons for this:
1. They waste my time 2. It encourages the further invasionsions of technology tracking
The first one should be relatively self evident. The second is more isideous, and one that I'm more concerned about in the long term. Streaming services selling adds will mean the creation of technology to further push tracking of whomever is view the content into the devices that they stream from: computers, tablets, phones, and TVs.
When I'm watching a show after a long day at work, I don't want to have to worry about whether my TV is tracking what I watch, etc. This technology is already being developed by smart tv manufacturers, for example, and already exists for the computer devices. And while ad brokers and clearinghouses definitely want tracking technology in every aspect of our lives, I'm getting fatigued by it all and want some portions of my life safe from the collection and sale of that information.
If I'm the product that these companies are selling, and the shows I'm watching are the "bait" to get me to agree with that (this is what print media became), then don't charge me, and tell me that.
I am just gonna stick to Piracy. I will continue get superior service while legit payers will continue to suffer.
I read this and I’m honestly still not sure what Ben’s point is. Needlessly long article that goes through so many irrelevant aspects.
Not to mention the clickbait title.
Not to mention the clickbait title.
> I read this and I’m honestly still not sure what Ben’s point is
It’s in the title
> Not to mention the clickbait title.
Why do you think the title is clickbait? It accurately reflects the contents of the article.
It’s in the title
> Not to mention the clickbait title.
Why do you think the title is clickbait? It accurately reflects the contents of the article.
So what you're saying is that the point of the article is in the title, and the title is not click bait because the point is reflected in the content? Sounds like circular logic.
We're coming full circle again. Netflix was the reason to stop pirating content, and now Netflix is the reason to return to piracy.
And to reiterate what many have already said, this perpetual growth and scale mentality is so so toxic.
And to reiterate what many have already said, this perpetual growth and scale mentality is so so toxic.
I don't normally mind stratechery, but I think this one is a complete miss.
I mean, he's... technically right? Netflix could start showing ads, and increase revenue (either from creating a lower price tier that encourages more adoption, or by adding ads to the lowest price tier to increase revenue).
Of course, that's also the same logic that hundreds of tech companies have already "figured out" about ads. And it always ignores the knock-on effects of ads seeping into other price tiers, of ads taking priority over other features, etc. etc... that eventually destroy entire platforms and pieces of software.
Of course, that's also the same logic that hundreds of tech companies have already "figured out" about ads. And it always ignores the knock-on effects of ads seeping into other price tiers, of ads taking priority over other features, etc. etc... that eventually destroy entire platforms and pieces of software.
It won't increase revenue if a large chunk of the currently subscribed-for-life people bail, it'll be eternally forfeited profits.
Just as a thought experiment - how many people currently subscribed would be subscribed for 30+ more years if they could just maintain what they have been doing for 30 years? The potential lifetime revenue is so huge it is a shame any time they do something that makes a lifetime subscriber bail on 30+ years of subscription payments without a second thought.
It's like they have the fish on the hook and they're debating if they can catch more fish by cutting the ones they have loose.
Just as a thought experiment - how many people currently subscribed would be subscribed for 30+ more years if they could just maintain what they have been doing for 30 years? The potential lifetime revenue is so huge it is a shame any time they do something that makes a lifetime subscriber bail on 30+ years of subscription payments without a second thought.
It's like they have the fish on the hook and they're debating if they can catch more fish by cutting the ones they have loose.
Now TV, a popular UK-specific OTT TV provider, has recently introduced ads. They're really annoying but of course you can opt out as part of their £5 a month premium surcharge (also slightly upgrades your picture resolution and adds surround sound). It's basically just a way of creaming off some extra cash from your more affluent subscribers while keeping the low price of entry. Very similar to airlines and train companies upselling "premium economy" seats which are basically the same as plain old economy about ten years ago.
I'm a big fan of Stratechery and the original thought behind most of the posts but I think this one completely misses the mark. Advertising is not a new model in the streaming space - Hulu has done it for years and is one of the things I hate most about it. As most people have said here int he comments - if Netflix adds advertising there would be an uproar.
Here are some ways I think Netflix could make money just off the top of my head,
* Netflix Live - Amazon does this to an extent and there's clearly a demand for live content. This could be sports, or a Twitch competitor or something original (reality tv meets live maybe).
* Pay for different regional content - Every VPN advertises the ability to switch countries to watch Netflix from a different country. I would happily pay more if I got access to the US content in addition to the UK. This is a legal problem more than an engineering problem though.
* Netflix Infra - every company out there seems to be creating a streaming service and frankly most of them are rubbish - they constantly buffer, have terrible apps and casting functionality. Netflix could create a product similar to AWS and rent out their infra. Yes it does cannibalize their own offering/product strengths but thats happening anyway as their competitors get their shit together
* Merchandising - there are a lot of crazy viral hits that Netflix seems to create - Squid Game was one of the most popular Halloween costumes last year. I should be able to order merch right from the app especially for Netflix originals. You only have to look at Disney to see the possibilities here.
Here are some ways I think Netflix could make money just off the top of my head,
* Netflix Live - Amazon does this to an extent and there's clearly a demand for live content. This could be sports, or a Twitch competitor or something original (reality tv meets live maybe).
* Pay for different regional content - Every VPN advertises the ability to switch countries to watch Netflix from a different country. I would happily pay more if I got access to the US content in addition to the UK. This is a legal problem more than an engineering problem though.
* Netflix Infra - every company out there seems to be creating a streaming service and frankly most of them are rubbish - they constantly buffer, have terrible apps and casting functionality. Netflix could create a product similar to AWS and rent out their infra. Yes it does cannibalize their own offering/product strengths but thats happening anyway as their competitors get their shit together
* Merchandising - there are a lot of crazy viral hits that Netflix seems to create - Squid Game was one of the most popular Halloween costumes last year. I should be able to order merch right from the app especially for Netflix originals. You only have to look at Disney to see the possibilities here.
> differentiation is no longer based on the user experience, but rather uniqueness
I heartily disagree. Ads are a reason to cancel, so that entire point can be put to the side. While the user experience is vastly different between streaming services. Also, the uniqueness of content is a double-edged sword. Netflix has focused on content that pushes boundaries, which is great for some people, but not all. But I digress. The point I was heading towards is that UX is the weak link in stream right now.
Good points of a streaming UX are/would be:
- Being able to restart a show exactly where you left off, and easily find it.
- Navigation being as easy on a roku remote as it is with a mouse and keyboard, including searching.
- Reliable buffering and streaming.
- Closed Captioning, especially if you can configure font size and placement.
- Ease of navigation of all the content.
- Good recommendations of what you would actually watch, not what they are pimping that month.
- Accurate representations of what is new and popular.
I'm sure the list could go on. But no service has nailed the experience yet. They each have their strengths and weaknesses. It is time for streaming to mature - to figure out how to make the experience as good as it can be, step up, and take a leadership position based on just how awesome it is to work with the product.
I heartily disagree. Ads are a reason to cancel, so that entire point can be put to the side. While the user experience is vastly different between streaming services. Also, the uniqueness of content is a double-edged sword. Netflix has focused on content that pushes boundaries, which is great for some people, but not all. But I digress. The point I was heading towards is that UX is the weak link in stream right now.
Good points of a streaming UX are/would be:
- Being able to restart a show exactly where you left off, and easily find it.
- Navigation being as easy on a roku remote as it is with a mouse and keyboard, including searching.
- Reliable buffering and streaming.
- Closed Captioning, especially if you can configure font size and placement.
- Ease of navigation of all the content.
- Good recommendations of what you would actually watch, not what they are pimping that month.
- Accurate representations of what is new and popular.
I'm sure the list could go on. But no service has nailed the experience yet. They each have their strengths and weaknesses. It is time for streaming to mature - to figure out how to make the experience as good as it can be, step up, and take a leadership position based on just how awesome it is to work with the product.
There's a wider dilemma at play for Netflix. As the article points out, they've reached a point where their main product (paid streaming) has saturated the market. They won and there's not much more to be gained there.
Options for their next move essentially boil down to:
(a) expand into "other bets" (e.g. games)
(b) compromise on the quality of their product and brand by selling ads to gain incremental revenue
(c) give up on growth and be happy with a large, sustainable business
They are openly pursuing (a), which is the ideal outcome. Ideally they can even launch gaming or some other form of entertainment as a separate subscription, helping to diversify their revenue.
I see (b) as the backup plan. If they're not able to diversify into another revenue source, their next best bet is to compromise their existing product and extract the final bit of juice using advertising. Some number of customers will drop down from paid to free, and that number is difficult to model. Netflix could also end up shooting themselves in the foot by introducing ads, if that convinces the whole industry to do the same. In the long run that will reduce margins for all.
Finally, (c) isn't compatible with the type of capitalist society we live in. Sometimes a company has peaked and that's OK.
Options for their next move essentially boil down to:
(a) expand into "other bets" (e.g. games)
(b) compromise on the quality of their product and brand by selling ads to gain incremental revenue
(c) give up on growth and be happy with a large, sustainable business
They are openly pursuing (a), which is the ideal outcome. Ideally they can even launch gaming or some other form of entertainment as a separate subscription, helping to diversify their revenue.
I see (b) as the backup plan. If they're not able to diversify into another revenue source, their next best bet is to compromise their existing product and extract the final bit of juice using advertising. Some number of customers will drop down from paid to free, and that number is difficult to model. Netflix could also end up shooting themselves in the foot by introducing ads, if that convinces the whole industry to do the same. In the long run that will reduce margins for all.
Finally, (c) isn't compatible with the type of capitalist society we live in. Sometimes a company has peaked and that's OK.
Beyond pursuing, right now, if you log into the Netflix app on your iPhone they have a Gamepass/Apple Arcade style set of game that you receive alongside your subscription.
Indeed, I played a round of a game made by Trivia Crack last night. It was my first time and I think it’s a new addition? Just popped up on my Home Screen yesterday.
Would it really be a benefit tough?
I would say no because:
Having all your costumers pay a monthly fixed price is the most comfortable and reliable way to earn money. Adds revenue is based on how many people see it, which is not known if have bunch of them in front of a TV, depends on the day of time, what is shown and so on...
Adds dictate what you can do. Ever heard a YouTuber say "I can't show or say this or I get demonitized"?
That would happen to Netflix too. And Netflix is an international company, showing nudity in German is not a problem. Showing violence in America is no problem but cater to both and try to sell Adds for that is going to be a mess. So it would completely destroy what Netflix is content wise, and thus lose a lot of customers. Generic bland drizzle TV that sells you Soap and other crap like cable TV? No thanks
And it is questionable if it increases revenue at all. Streaming costs money. I have a Netflix account which I seldomly use. If I where to watch add based Netflix they would earn way less from me. Maybe that is the case for the average user as well. The author does not know but the people at Netflix probably do.
I would say no because:
Having all your costumers pay a monthly fixed price is the most comfortable and reliable way to earn money. Adds revenue is based on how many people see it, which is not known if have bunch of them in front of a TV, depends on the day of time, what is shown and so on...
Adds dictate what you can do. Ever heard a YouTuber say "I can't show or say this or I get demonitized"?
That would happen to Netflix too. And Netflix is an international company, showing nudity in German is not a problem. Showing violence in America is no problem but cater to both and try to sell Adds for that is going to be a mess. So it would completely destroy what Netflix is content wise, and thus lose a lot of customers. Generic bland drizzle TV that sells you Soap and other crap like cable TV? No thanks
And it is questionable if it increases revenue at all. Streaming costs money. I have a Netflix account which I seldomly use. If I where to watch add based Netflix they would earn way less from me. Maybe that is the case for the average user as well. The author does not know but the people at Netflix probably do.
Netflix has two key disadvantages when compared to competitors:
- A lack of broader ecosystem leverage. Apple (through devices and Apple One), Amazon (through retail delivery with Amazon Prime) and to a lesser extent Disney (via their IP) can leverage these assets to both support streaming growth and not require direct profitability.
- A lack of quality. The shovelware of content that Netflix has focused on in the last few years will be their downfall. It makes ideas such as adding advertising palatable – most of the content is crap so why won't they put ads next to it?
Apple's best picture win for CODA was an inflection point in the streaming wars. It shatters the illusion that Netflix is the premiere streaming service. Netflix is still the biggest but over time the lack of quality will further tarnish their brand and impact on their ability to raise prices.
From a content quality perspective, Netflix with ads will be compared in consumers minds to YouTube. Once this occurs, consumers won't want to pay much more for Netflix than they currently do for YouTube.
- A lack of broader ecosystem leverage. Apple (through devices and Apple One), Amazon (through retail delivery with Amazon Prime) and to a lesser extent Disney (via their IP) can leverage these assets to both support streaming growth and not require direct profitability.
- A lack of quality. The shovelware of content that Netflix has focused on in the last few years will be their downfall. It makes ideas such as adding advertising palatable – most of the content is crap so why won't they put ads next to it?
Apple's best picture win for CODA was an inflection point in the streaming wars. It shatters the illusion that Netflix is the premiere streaming service. Netflix is still the biggest but over time the lack of quality will further tarnish their brand and impact on their ability to raise prices.
From a content quality perspective, Netflix with ads will be compared in consumers minds to YouTube. Once this occurs, consumers won't want to pay much more for Netflix than they currently do for YouTube.
As a movie fan, I despise Netflix's creative line. Their model is to create dumb TV Shows repeating the same concepts over +8 seasons with no real inherent concept. People just get engaged because it's what's closest and easiest to watch.
Now, said that, The Power of the Dog and Rome were two very good movies that somehow came out of Netflix. I don't think that CODA is such a turning point. All these services are pouring so much money into productions that sometimes they hit the bullseye.
Now, said that, The Power of the Dog and Rome were two very good movies that somehow came out of Netflix. I don't think that CODA is such a turning point. All these services are pouring so much money into productions that sometimes they hit the bullseye.
Just do live sports already. Netflix has proved that there is a limit that can be hit by chasing long-tail viewership alone. Sports content is extremly fresh and generally exclusive. This could then be re-packaged into 'Drive to survive' type show as well. Amazon already did this partially with 'The Test' in Cricket context.
You know how there are so many nice posts that make you go "I would want to buy this person coffee/beer if I could.", I feel the exact opposite towards this person. People like this are why shitty services like Hulu exist and why cable TV charges you $200 and is 70% (at least) ads!
I will pay netflix more than any cable company because the quality of their content.
Exploitative capitalism at its finest. Shortsighted greed with no room for imagination. I can spend 15 min and come up with at least 5 ways to charge customers more without needing to sell them ads. I don't care if it costs $0.99 I will cancel if they have even one ad and I will pay up to $2-300 for no ads (including for other users because it creates a perverse incentive to collect user data and sell anyways). You want cheaper with ads? There is a myriad of services that provide that (although the cheap part is rare!)
I will pay netflix more than any cable company because the quality of their content.
Exploitative capitalism at its finest. Shortsighted greed with no room for imagination. I can spend 15 min and come up with at least 5 ways to charge customers more without needing to sell them ads. I don't care if it costs $0.99 I will cancel if they have even one ad and I will pay up to $2-300 for no ads (including for other users because it creates a perverse incentive to collect user data and sell anyways). You want cheaper with ads? There is a myriad of services that provide that (although the cheap part is rare!)
[deleted]
> including for other users because it creates a perverse incentive to collect user data and sell anyways
Huh?
I don’t see Facebook or Google going around selling user data, it’s secret sauce they want to protect. Why would netflix sell user data if they start advertising? Wouldn’t that be more likely in a world where user data isn’t otherwise a major revenue source for them? (Although collecting user data is clearly already super important for netflix as they use it to design their content)
Huh?
I don’t see Facebook or Google going around selling user data, it’s secret sauce they want to protect. Why would netflix sell user data if they start advertising? Wouldn’t that be more likely in a world where user data isn’t otherwise a major revenue source for them? (Although collecting user data is clearly already super important for netflix as they use it to design their content)
Because to netflix it is supplemental income, to fb and google it is their main income. Google and fb run their own ad network as well. Why would netflix not sell your interests in movies and habits to allow better targeting in their platform? If you get a no ad experience, why waste the opportunity? Sell it to others so they can target you elsewhere. That is, if they go down the ad road.
> Why would netflix not sell your interests in movies and habits to allow better targeting in their platform?
Why would they need to sell that data to allow better targeting? Doesn’t make sense.
> That is, if they go down the ad road.
Why would adding ads to Netflix force them to do these things that they would already be perfectly capable of doing? Netflix collects tons of data, could sell it if they wanted.
Why would they need to sell that data to allow better targeting? Doesn’t make sense.
> That is, if they go down the ad road.
Why would adding ads to Netflix force them to do these things that they would already be perfectly capable of doing? Netflix collects tons of data, could sell it if they wanted.
It wouldn't force them but if they are collecting data from users, why let it go to waste? They are capable of doing this now but they chose to accept subscription fees instead. If ads are acceptable to some users then collection of data valuable for advertising from all users is only logical since it is transparent for nearly all users and if you are not going to show some users ads then why waste the data collection when you can partner with ad platforms.
For example, your bank gives you a checking account, some require you to maintain some balance or a fee applies. They charge merchants when you use debit cards too, but they collect your payment info, at some point they all decided to sell your payment info to allow companies like google to connect targeting with purchases. Why waste precious data when you can monetize it ? (At least that is their reasoning I disagree with)
For example, your bank gives you a checking account, some require you to maintain some balance or a fee applies. They charge merchants when you use debit cards too, but they collect your payment info, at some point they all decided to sell your payment info to allow companies like google to connect targeting with purchases. Why waste precious data when you can monetize it ? (At least that is their reasoning I disagree with)
There really isn’t a coherent logic here as far as I can tell.
Netflix already collects a huge amount of user data. Do they sell it now? I don’t know, maybe.
If Netflix launched an ad-supported subscription plan, why would that make them more likely to sell the data which they already collect?
I can’t see any obvious connection between selling ad spots and selling user data.
> Why waste precious data when you can monetize it ?
They have this data. They will continue to have this data if they don’t show ads, and they will also continue to have this data if they do show ads.
Why is the data not being wasted now? Why would the situation be different if Netflix offered ad-supported plans?
Netflix already collects a huge amount of user data. Do they sell it now? I don’t know, maybe.
If Netflix launched an ad-supported subscription plan, why would that make them more likely to sell the data which they already collect?
I can’t see any obvious connection between selling ad spots and selling user data.
> Why waste precious data when you can monetize it ?
They have this data. They will continue to have this data if they don’t show ads, and they will also continue to have this data if they do show ads.
Why is the data not being wasted now? Why would the situation be different if Netflix offered ad-supported plans?
The author seems oblivious to the fact that Netflix's main competition are not other streaming or entertainment companies, but filesharing and unauthorized streaming.
Netflix won that competition by providing a simple, quality product, at a price point that, for most people, makes torrenting no longer appealing. The moment they try to push unskippable ads down the throat of those consumers is the exact point where a large bulk of them will reassess if spending 5 minutes to hunt down torrents and watch them uninterrupted is a better deal than paying for a service that stops your movie for 5 minutes to show ads.
Sure, they could go for short unintrusive ads before the show starts. But you can't generate significant revenue with that, otherwise every TV station would do it and streaming and pay-per-view would not exist.
Netflix won that competition by providing a simple, quality product, at a price point that, for most people, makes torrenting no longer appealing. The moment they try to push unskippable ads down the throat of those consumers is the exact point where a large bulk of them will reassess if spending 5 minutes to hunt down torrents and watch them uninterrupted is a better deal than paying for a service that stops your movie for 5 minutes to show ads.
Sure, they could go for short unintrusive ads before the show starts. But you can't generate significant revenue with that, otherwise every TV station would do it and streaming and pay-per-view would not exist.
> The author seems oblivious to the fact that Netflix's main competition are not other streaming or entertainment companies, but filesharing and unauthorized streaming.
This isn't really true. Netflix's biggest worry is Disney+, I'd have thought -- the streaming company which simultaneously has exclusivity over very nearly a controlling share of US-centric cinema/TV content and is the last to market with the most growth potential.
Netflix's second biggest worry is Amazon Video, which is gobbling up studios and franchises all over the place but is at least at this point just a component part of the nearest thing to a universal service provider that the world has seen since the fall of Soviet communism.
This isn't really true. Netflix's biggest worry is Disney+, I'd have thought -- the streaming company which simultaneously has exclusivity over very nearly a controlling share of US-centric cinema/TV content and is the last to market with the most growth potential.
Netflix's second biggest worry is Amazon Video, which is gobbling up studios and franchises all over the place but is at least at this point just a component part of the nearest thing to a universal service provider that the world has seen since the fall of Soviet communism.
With the removal of account sharing, with recent prices bump, more and more competition getting comfortable on the VOD market, they can't currently go all in at angrying their customers.
Rarely but Netflix produces good content sometimes and DRM won't protect it from getting pirated.
Rarely but Netflix produces good content sometimes and DRM won't protect it from getting pirated.
They may be able to make more money this way. To me this is akin to explain why we should be strip mining or clear cutting more. It works from a scorched earth capitalism perspective, but doesn't leave is in a good place
Subscribers are more valuable people to market to than non-subscribers because they've already qualified themselves by proving they'll spend money for something.
A big part of that something is not wanting any goddamned ads though.
Ads are by their very nature derogatory to anywhere they are placed. Ads never add value to any experience. They always take time and attention from the viewer's intended activity.
Not all product information is advertisement.
Not all product information is advertisement.
Netflix could have gotten away with ads a few years ago maybe. Not now with all the competition available. their content is relatively weak tbh now that a lot of the classics have moved to other platforms. I'd be gone immediately
I don't think they could have, even then.
Competition was incredibly fierce, it just came from cable TV.
The main subscriber base for Netflix was essentially folks who didn't want to see ads, and were willing to ditch cable tv for that experience.
Competition was incredibly fierce, it just came from cable TV.
The main subscriber base for Netflix was essentially folks who didn't want to see ads, and were willing to ditch cable tv for that experience.
Probably true, but somewhere between 2015 and 2020 netflix was a pretty dominant monopoly - at least in my area.
Controlled viewing comparable to directTV / OnDemand was the main selling point. Being able to binge an entire show at will. Breaking Bad hitting its peak. I think they would have gotten away with it
Controlled viewing comparable to directTV / OnDemand was the main selling point. Being able to binge an entire show at will. Breaking Bad hitting its peak. I think they would have gotten away with it
I think many people think the ads on the Superbowl are an attraction.
The advertisement part of the superbowl content takes away from being entertained. The negative impact to the consumer is being manipulated, for example, to prefer budweiser over coors because the giant horses and dalmatian puppy made you tear up. That's got nothing to do with beer.
Remove the advertisement / manipulation from the content and it's more valuable to the consumer.
Remove the advertisement / manipulation from the content and it's more valuable to the consumer.
I feel super bowl commercial are different though. They aren’t the average ads—they are the high budget, high creativity jewel crown of ads.
Yep, they are the top of the dung heap.
Agreed. Netflix need to decide whether they want to be more like Google/Amazon (multiple diversified bets) or Spotify (one undiversified but very strong ecosystem).
This is just regular capitalism.
Adam Smith, John Stuart Mill, and Karl Marx all agreed on the tendency of the rate of profit to fall.
https://wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to...
Adam Smith, John Stuart Mill, and Karl Marx all agreed on the tendency of the rate of profit to fall.
https://wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to...
Right and everyone agrees Smith and Marx got everything right.
https://en.wikipedia.org/wiki/Labor_theory_of_value
https://en.wikipedia.org/wiki/Labor_theory_of_value
I can't think of a faster way to make people unsubscribe. If they are already paying for it and you expect them to watch ads, you must be out of your mind. The ad model only works when the product is free. It's a binary choice.
I love Netflix for the instant content and no ads. The fact I can binge watch and not have to wait every week for an episode I love. I pay Netflix not to wait and not to be distracted by unsolicited content (i.e. ads or previews of other shows when I start an episode).
Youtube ads drive me nuts. I refuse to pay for a subscription for user generated content. A real paradox here. I am ok with it remaining as is. Just don't bring ads to Netflix! I am happy to pay the subscription.
Netflix exploring games and other types of content delivery is a smart move. Going from offering passive content to interactive content is not easy though. Wonder where that will lead...
Youtube ads drive me nuts. I refuse to pay for a subscription for user generated content. A real paradox here. I am ok with it remaining as is. Just don't bring ads to Netflix! I am happy to pay the subscription.
Netflix exploring games and other types of content delivery is a smart move. Going from offering passive content to interactive content is not easy though. Wonder where that will lead...
If netflix puts ads on my subscription, I would shut it down and go back to bittorrent
This is something I have been thinking about too; the question what’s next for Netflix. They feel done, now they are a phase where they just churn out new content and hope to retain the customer base. Netflix feels like it became more of a media company and less tech at this point. Whether they now have a lower priced tier with ads or not is kind of pointless. Sure they will make more money in the short term but they will inevitably reach the same position after they exhaust that customer base too. They are now a big stable business and they have to come to terms with it.
I am actually quite surprised Netflix is not heavily into product placements. They have globally popular shows, if nothing else get a soda sponsorship show the Coke/Pepsi cans are the local labeling for every country a show streams. It is not as if such object replacements cannot be 95% automated now. Seriously. Why subject people to the piss poor overt manipulation of advertising when the service's own programming can embed sponsorship transparently into their shows?
The algorithm which encourage subscribers binge watch shows really ended up hurting the product. The problem isn't just market saturation; we also run out of content that's going to be entertaining for users. This is basically the law of diminishing marginal utility. Netflix's shouldn't have copied YouTube in this case. A kind of system where users felt in control when to stop watching should've been put into place.
I had a free year subsciption to Paramount+ from my cel provider. I canceled it on day 1 because it had ads. I would do the same to Netflix, even if the service was free.
I can cancel my sub in less time than it takes to watch an add.
The main reaction here seems to be "if Netflix starts showing me ads I'm going to cancel immediately", and Netflix should definitely not do that. Ben's proposal is that Netflix add an ad-supported tier, to expand to people who currently don't subscribe because it's too expensive. This is how Hulu, YouTube, Paramount, etc. already work: you can subscribe with or without ads, priced accordingly.
Not today satan.
No, Netflix should not sell ads. What they should do is start syndicating some of their content on lower tier platforms. Those platforms that might very well be ad-based, perhaps even run by Netflix, off-brand if they don't find any takers. Modeled after the old trickle-down from cinema to video to broadcast. This wouldn't just be another income stream, it would also be an ad for "real" Netflix.
No. Just fuck no. Netflix is about the only media one can enjoy without being bombarded with advertising to sell me products I don't have the money (cars) or any need for.
The sad reality however is that an user-friendly, ad and spyware-free experience will never get the amount of investor money that the hypergrowth-driven startups get in the hope of establishing dominance followed by rent-seeking.
The sad reality however is that an user-friendly, ad and spyware-free experience will never get the amount of investor money that the hypergrowth-driven startups get in the hope of establishing dominance followed by rent-seeking.
Mmmm a little embrace extend extinguish of the cable world, what a new concept
Netflix stomped the breath out of cable and then became the thing it sought to replace
Netflix stomped the breath out of cable and then became the thing it sought to replace
Netflix's content deteriorated the last one year (at least here in Switzerland). Once there is a good show and I finish it, I have to search for new one increasingly longer. They increased the prices (again). Now putting adds, for increasingly more expensive and less quality service will be the final nail.
The day Netflix has ads is the day I cancel
"the fact that advertising is a great opportunity that aligns with Netflix’s business"
Except that it doesn't. Netflix's business model is providing people with ad-free content.
This is just another example of the truism that there isn't anything in the world that an MBA can't make worse.
Except that it doesn't. Netflix's business model is providing people with ad-free content.
This is just another example of the truism that there isn't anything in the world that an MBA can't make worse.
[deleted]
I don’t watch advertisements. I avoid them and block them online, I mute them when I have to see them on television, or YouTube. I do not want to see ads and I will do all I can to avoid them. That means canceling my Netflix subscription in a heartbeat.
Why Stratechery aspires to be an industry rag but the guy can't write well (2239 of 2239)
Because asking a company to put ads on a product their already charge for, is such a sophisticated and unique take, dunno how this guy doesn't have a Pulitzer already. I don't think 3 dollars less of a monthly subscription justifies a truckload of shitty ads. Disgraceful.
Subscription + ads is basically the cable model. It's a slippery slope to how things are today.. plus once ads are in the mix, there is more competition. The only thing that makes awful shows bearable on netflix is that there are no ads
Netflix already has ads. They just don't look like normal ads because they are product placement in Netflix created content. Which I don't mind as long as it doesn't turn the show or movie into a long commercial.
[deleted]
If they bring ads to the platform I will never again subscribe and I will say if anyone in my family wants it they can purchase it but I won’t support it. I’m sick of being nickel and fined by every company for every ounce of revenue.
Netflix now has competitors. I really dislike ads and I think it will worsen the experience so significantly that I'll just switch.
Even those small in-house ads for amazon prime are annoying, I can't imagine what real tv-style ads will do.
Even those small in-house ads for amazon prime are annoying, I can't imagine what real tv-style ads will do.
Eww no. So that they can end up a cess pool like Facebook, google, twitter, etc?
What would be super refreshing would be a tech company that stays private and focuses on a useful product instead of growth hacking.
What would be super refreshing would be a tech company that stays private and focuses on a useful product instead of growth hacking.
- bad UI/UX
- bad performance (wich indicates poor tech)
- bad "netflix" productions
- price increase
- competition growing
- lack of reactivity
the only thing i remember from netflix is their intro video, and the countless of netflix flops (cowboy bebop for example)
- bad performance (wich indicates poor tech)
- bad "netflix" productions
- price increase
- competition growing
- lack of reactivity
the only thing i remember from netflix is their intro video, and the countless of netflix flops (cowboy bebop for example)
This guy honestly writes the absolute dumbest stuff on the internet (perhaps second only to PG) but because he does it in a very verbose way HN eats it right up.
I think they should enter the gaming market. Perhaps put some pressure on Steam who has just refused to refund a terrible game that I have played for 3 hours.
The Balkanization of streaming services has me ready to try Netflix DVD again. Anyone out there still subscribing? How is it?
I still subscribe to the DVD by mail service. If Netflix had ads in streaming content, we'd use that more.
Comments looks like the HN bubble. I think OP is reasonable for strategy, regardless of ads hate.
back to torrents? i mean.. that's what people are going to do. The only thing you have to do to defeat torrenting, is offer a better service. It's not rocket science. Putting ads in your streaming service is like the opposite of that.
Will it be free if it sells ads or will people pay for the privilege of watch ads?
The moment netflix starts selling ads I go back to hoisting the jolly roger.
This, right here, is a piece of pure crystalline corrosive evil.
I like how capitalism can boost innovative ideas but I also hate how it's eager to burst them into flames just to jump on the next thing to make more money.
Almost every service I know quickly moves from the "it's cool" phase to the "get this other feature you don't need" phase just to get a 0.6% extra of growth.
So many great services are now packed with ads and useless features that just make the experience worse and filled with annoying bells and whistles.
YouTube and Reddit are just two examples, they're increasingly more annoying to use and if there were decent alternatives in terms of content I'd jump to them in a blink. Instead, for now, I just pretty much stopped using Reddit and go to YouTube only when I truly need, for how much I despise the quantity of ads and smoke they throw at you.
Almost every service I know quickly moves from the "it's cool" phase to the "get this other feature you don't need" phase just to get a 0.6% extra of growth.
So many great services are now packed with ads and useless features that just make the experience worse and filled with annoying bells and whistles.
YouTube and Reddit are just two examples, they're increasingly more annoying to use and if there were decent alternatives in terms of content I'd jump to them in a blink. Instead, for now, I just pretty much stopped using Reddit and go to YouTube only when I truly need, for how much I despise the quantity of ads and smoke they throw at you.
I don't pay for ads, I pay for streaming.
“This post contains product placement”
Now I'm scared of two things.
1) Netflix will start using product-placement in their original shows to boost revenue.
2) They're already doing this and I just haven't noticed.
maybe netflix should package internet fiber optic to ensure quality and exclusivity
netflix could add a "live" channel that is similar to a twitch channel
No they shouldn't sell ads, imo.
Instead they should open their platform to third party content, give those publishers a share of subscription revenues, and allow capitalism to work its magic.
Instead they should open their platform to third party content, give those publishers a share of subscription revenues, and allow capitalism to work its magic.
I would drop that subscription so fast.
Boo that man! Booo!!! Booooo!!!
Classic clickbait. Post a terrible idea, that gets people angry, and they click through.
Ignore this and don't click.
Ignore this and don't click.
It's the long term future of all streaming. After they increase subscription prices and their subscriber growth stops, they will still need to increase revenue.
So they will sell ads. In 20 years streaming will look like cable TV.
So they will sell ads. In 20 years streaming will look like cable TV.
less than 20 years i think
If Netflix starts selling ads then only Netflix executives will watch the shows, everyone else will cancel their subscriptions.
I'm happy to go back to using BitTorrent for everything if they insist on making the experience of paying for shows worse than pirating them.
[deleted]
Yeah, the quality of a lot of Netflix shows just feels inferior to other platforms.
You say that but people have been watching cable TV for decades.
Maybe the key point being that they are a different audience, Netflix users seek something else.
Copy cable TV business plan and theses users will just migrate elsewhere. Way to shot on your own foot.
Copy cable TV business plan and theses users will just migrate elsewhere. Way to shot on your own foot.
Speaking of cable, if the quality of Netflix produced content would be comparable to the one of hbo or Disney I would even consider paying for it and watch ads. But I think Netflix subscriptions are going down because m, at least in my personal experience, the content is just offensively stupid, banal, childish and poor. Maybe the first step should be to product stuff that makes sense
I'm guessing you aren't a schumer fan
https://www.rottentomatoes.com/m/amy_schumer_growing This? I don't have netflix anymore for a couple of years, so I wasn't aware of this.. but I would say that if I did, I wouldn't be a fan of this ;o
But that’s clearly not what’s happening here, even if you disagree with the idea.
The title is consistent with the contents of the article. The contents of the article are not deliberately terrible, in fact they’re not terrible at all.
The title is consistent with the contents of the article. The contents of the article are not deliberately terrible, in fact they’re not terrible at all.
This isn’t any other writer. This is Stratechery, damn it. It’s Ben.
Classic kneejerk emotional reaction.
Classic kneejerk emotional reaction.
Doesn't mean their stuff can't suck. Like this article. Which sucks.
I disagree, it doesn't suck.
You need to seperate personal distaste for advertisement and objective analysis / business strategy. I hate ads as much as anyone, but I don't think the article sucks. Quite the opposite actually.
If I were an investor in Netflix, I would vote for this.
You need to seperate personal distaste for advertisement and objective analysis / business strategy. I hate ads as much as anyone, but I don't think the article sucks. Quite the opposite actually.
If I were an investor in Netflix, I would vote for this.
You're entitled to your opinion. And my opinion is that yours sucks.
On HN we normally try to avoid such shallow dismissals. Can you explain why his opinion sucks?
It depends when you want to sell your stock.
If Netflix goes too in for "background" with "ads", it will be watered down and completing with other Hollywood cops and TikTok alike. Too many completing concerns and it won't be able to serve all markets well.
So sure it could look good in the interim, and many corporate strategies do.
I get why Stratechery likes it on some level. Slaying the sacred cow here is like Intel deciding to do the iPhone as ARM. Put I think it's different, in that Intel was first in the lead and so would be good at a lower margin iPhone business, whereas Netflix has no real advantage over TikTok and whatever other background content competitors already exist.
If Netflix goes too in for "background" with "ads", it will be watered down and completing with other Hollywood cops and TikTok alike. Too many completing concerns and it won't be able to serve all markets well.
So sure it could look good in the interim, and many corporate strategies do.
I get why Stratechery likes it on some level. Slaying the sacred cow here is like Intel deciding to do the iPhone as ARM. Put I think it's different, in that Intel was first in the lead and so would be good at a lower margin iPhone business, whereas Netflix has no real advantage over TikTok and whatever other background content competitors already exist.
Perhaps we should be looking at the strongest possible version of Stratechery’s argument (which also seems to be the one they presented).
Stratechery suggests that:
> markets like India have more room to grow, but much lower household incomes, and Netflix’s relatively high prices have been an obstacle.
> advertising-supported or subsidized tier would expand Netflix’s subscriber base, which is not only good for the company’s long-term growth prospects, but also competitive position when it comes to acquiring content.
>This also applies to the company’s recent attempts to crack down on password sharing, and struggles in the developing world: an advertising-based tier is a much more accessible alternative.
>[Ad-supported plans] would provide an alternative for marginal customers who might otherwise churn, and on the other hand, it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers).
Stratechery suggests that:
> markets like India have more room to grow, but much lower household incomes, and Netflix’s relatively high prices have been an obstacle.
> advertising-supported or subsidized tier would expand Netflix’s subscriber base, which is not only good for the company’s long-term growth prospects, but also competitive position when it comes to acquiring content.
>This also applies to the company’s recent attempts to crack down on password sharing, and struggles in the developing world: an advertising-based tier is a much more accessible alternative.
>[Ad-supported plans] would provide an alternative for marginal customers who might otherwise churn, and on the other hand, it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers).
Free tier vs paid tier always made perfect sense in theory, but what industry has actually pulled this off?
Newspapers? Hah. Spotify? Perhaps.
The problem with capital-gains-driven investment is Netflix can't just sit semi-sustainability at a steady share price and just pay out a dividend. Instead we're likely to see all sorts of jerking around until the business shoots itself in the foot.
Newspapers? Hah. Spotify? Perhaps.
The problem with capital-gains-driven investment is Netflix can't just sit semi-sustainability at a steady share price and just pay out a dividend. Instead we're likely to see all sorts of jerking around until the business shoots itself in the foot.
Without getting to "rate of profit tends to fall-y" the goal of a business, rather than its owners, should be to become a utility.
Low margin, boring, ubiquitous, essential.
This is the highest award society bestows on a good service.
Low margin, boring, ubiquitous, essential.
This is the highest award society bestows on a good service.
[deleted]
Netflix shows are already filled with ads.
I don't understand all these people who think they have an ad free experience watching on netflix.
I think there is a certain difference between the show pausing for 5 minutes to show me an ad of a brand new Jeep, that has absolutely nothing to do with the show I was watching, and the character in the show using a brand new Jeep with the logo prominently visible. The first one gets in the way of me enjoying the show, the second one does not.
The comparison between a long ad break and a single minor product placement isn't a fair, I've never seen a single 5 minute ad for a car on TV. But I guess it does answer the question of how some people think.
Ok, then pausing the show for a 30 second ad is equally unacceptable to me - is that better?
It was obviously hyperbolic.
If Netflix at the same time increased the cost of a "non adverstiment" product that is just adding insult to injury.
I have structured my media consumption such that I rarely see any ads, and never any tv-ads.
If find them painful to watch in a real sense of the words.
That means I have dropped a lot of services/products/venues/channels but I have never missed them and certainly not to a degree that would entice me to return.
When I visit someone who has the telly on and it runs in the background I have to grind my teeth and try to find some solution to turning it off.
A dentist I no longer see did an "upgrade" of the office and got TVs mounted in the ceiling and headphones. As the doctor was drilling away having fun, I was supposed to relax, watch tv and have fun.
The drilling was less painful and annoying than having to watch ads every 5 minutes. Closing my eyes was a good option but still the headphones.
My new dentist has logic and math puzzles that he or someone he knows has hand drawn artistically on a big sheet of cardboard that he then attatchs to the ceiling.
This is so much better in every way.
It is also a lot cheaper and better for nature.
I have asked him about tvs and thankfully he has no intention of buying any. He changes them out once a month I think