Faced with a looming plateau in the numbers of subscribers Netflix can attract with a market penetration of 190 countries (only absent in China, North Korea and Syria), brands have been hoping the streaming service will open its platform to adverts.
But Netflix’s aversion to traditional advertising remains unwavering for the foreseeable future, it was revealed today (24 October), as the media company focuses on protecting the customer experience.
Speaking at Westminster Media Forum in a rare appearance, Netflix, which called itself “the world’s leading internet entertainment network”, said its focus on being a personalised streaming service that “gives back control to the user” is an “ongoing effort”.
The internet TV service is constantly iterating its product “as result of user preferences”, said Cees van Koppen, manager public policy EMEA at Netflix, which includes more intelligent personalisation and the introduction of new technology like 4K, HDR and Dolby Atmos.
However, when quizzed as to whether its experimentation in new formats would include live TV, as its rival Amazon Prime introduced in May this year with the launch of Channels, van Koppen inferred that broadcasters like the BBC are better placed to offer a ‘hybrid’ model of live programming and on-demand than an internet company would be.
“Live TV streaming, if you think about it, is only relevant when it is urgent and when it is eventful in our minds – like live sports, news, something like The Voice,” van Koppen said. “It is our company’s vision that most of the services that offer content will move into the internet world which means they will find a hybrid between live programming and on-demand. You will have that in one offer from the BBC itself. We are just a licenser of the BBC content and we like to be in business with them as far as co-productions go.”
“I don’t really see us soonish [sic] doing live events and carrying live content from the BBC,” he added.
While Netflix is 20 years old, it has only been a streaming service for half of its life. Von Koppen charted the tech company’s transition from a DVD-by-post service to a content company that has 100 million global members, operates in 190 countries, has 400 original titles and will spend a total of $6bn in original programming this year alone. On its recent earnings call, the company said it expected this budget to rise to between $7bn and $8bn in 2018.
But this investment in original content is not without a cost. The service has said it is expecting to raise $1.6bn in debt due to pouring money into content, and while it recently raised the price of its subscriptions, some in the industry feel that an inevitable stagnation in its growth will lead the service to look to advertising revenue to offset its losses.
That said, Netflix’s reluctance to introduce ad breaks did not waver today, as von Koppen said he didn’t see the streaming service introducing ad breaks to its folds “any time soon, if ever”, much to the chagrin of brands. The service does offer product placement and has made moves in the merchandising space with its popular show Stranger Things, but von Koppen said it is “very important” for its viewers not to have ad breaks, when the service has trained its viewers to expect Netflix content ad-free.
“On demand without ad breaks – you never go back to watching 20 minutes of ad breaks,” he said.