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May 17, 2022

Netflix dropped a reality bomb this week that we can't say wasn't already expected: content ads are coming. Alongside the password-sharing crackdown, Netflix now plans to launch ads on its streaming service. That's a huge reversal for a company that notably resisted this move in both word and deed as recently as last year.

Netflix Ads...Say It Ain't So!

Netflix with ads. Netflix...with ADVERTISEMENTS. That's something many of us hoped would never happen, but let's face it: This was always going to happen. Netflix has struggled with revenue for a long time, and has basically spent every dollar that comes in on its lofty content goals. Now, with increased competition, the company is facing huge subscriber losses and needs to generate revenue in ways it resisted. Previously, that was by fighting against VPN usage. Then, future plans to attack password sharing. And now, launching ads on its content.

What does this mean for Netflix?

The most obvious impact this will have on users is that you'll have to sit through advertisements. That's something many people hate, and one thing many subscribers appreciated about Netflix. All the content you love, no need to sit through advertisements of any kind. And cheap! What more could you want?

Netflix should anticipate some major pushback as a result of launching ads. Probably more than with its password-sharing crackdown. There's a catch, however. If those ads lean heavily into star talent, people won't mind. Studies show most people are OK with ads when those ads feature TV, movie, and music personalities they like.

What does this mean for customers?

Well...you're going to have to watch ads. And for those of you who watch Netflix on web browsers: Netflix will probably block ad-blocking tools, so don't get too smug.

Now, Netflix is not unintelligent. It has some smart talent and although it's been a leader in some respects, it's also (hopefully) is humble enough to pay attention to trends. More likely than not, it'll launch ads alongside new payments tiers that will include a higher-cost ad-free tier and a reduced-cost ad-supported tier.

Competitors are watching

You can bet your sweet Roku that Netflix's competitors are watching what's happening at the company with both glee and trepidation. This is not going to be fun for Netflix. It's going to hurt, at least in the short term, and that's good for Netflix competitors. But Netflix could pull some surprises and do what it does best: innovate. And if it does, it could come out a clear winner in this new age of streaming.

This Week's Streaming Guide

Paramount+'s Black Gold docu-drama premieres today

Watch the gripping tale of how Exxon attempted to cover up a major disaster and plunged the world into an oil crisis in the process. Available today (May 17). - Watch on Paramount+

Netflix docu-drama Cyber Hell: Exposing an Internet Horror premieres

"Anonymous and exploitative, a network of online chat rooms ran rampant with sex crimes. The hunt to take down its operators required guts and tenacity." Streaming Wednesday (May 18) on Netflix.

New Prime Video sci-fi series Night Sky streaming Friday

"Irene and Franklin York, a retired couple, have a secret: a Chamber buried in their backyard that miraculously leads to a strange, deserted planet." Available Friday (May 20). - Watch on Prime Video

Get into the head of Elon Musk with FX's Elon Musk's Crash Course

Streaming this Friday (May 20), this FX documentary explores how the world's most popular innovator and CEO got to where he is today. - Watch FX Without Cable

News and Industry Developments

Netflix says ads may come by end of 2022

Right alongside its password-sharing crackdown. - NY Times

Netflix could make billions from ads

Other on-demand streaming services could follow in its footsteps. - Fortune

YouTube TV now has Spanish language plans

The company joins a small number of live TV streaming providers offering services for Spanish-language viewers. - TheVerge

FuboTV drops 4K from base plan for new customers

New customers will now need to pay more to get 4K streaming content. - The Streamable