Offering hints that advertising could eventually become a component of Netflix’s streaming business, several users have told Cord Cutter News that they have begun to see post-roll ads for Netflix originals show up when viewing content on the Xbox 360.
Netflix didn’t deny that it’s inserting those promos, but likewise did not offer more details on what else it might have in mind.
“We are always testing new things via the service, many of which never see a rollout,” a Netlfix spokeswoman said via email. “We have nothing more to add at this point.”
Update: Netflix has since issued a much stronger statement, telling Motherboard that "[w]e do not and will not be adding third-party ads." So, promos about Netflix shows, yes. Ads for Crest 3D White Advanced Vivid Enamel Renewal Toothpaste? No.
One person who thinks Netflix should add advertising to its platform is WPP chief exec Sir Martin Sorrell, who told a London conference last month that he believes the OTT provider will need to blend in advertising in order to stay in the black amid increasing financial commitments tied to original productions.
Paired with strong subscriber growth, Netflix pulled in a profit in the first quarter of 2015, though it was less than what analysts were expecting. Netflix streaming subs also watched 10 billion hours during Q1.
Meanwhile, Hulu, a service that competes with Netflix and is coming off a string of distribution deals with MVPDs, enjoys a dual revenue stream – its base subscription service, plus advertising. It reasons that advertising is necessary in order to “reduce the monthly subscription price of the service.”