Ads are coming to Netflix (NFLX). I know, I know. It sounds like a monstrous mistake. We signed up for Netflix to watch our favorite shows commercial-free. But Netflix is hurting. And an ad-supported tier could help the company, which is losing subscribers and watching revenue slow, return to the kind of growth investors fell in love with.
But Netflix will need to ensure that its new ad-supported experience isn’t overbearing. Consumers aren’t going to sign up for a platform that smashes them in the face with 15 minutes of ads for 30 minutes of content.
“Ad-supported feels like a useful move for consumers and for these companies,” explained Forrester VP and principal analyst Joanna O’Connell. “And yet, how do they do it in a way that doesn't suck? I mean, that is the billion dollar question for me.”
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Netflix’s needs to tread carefully when it comes to ads
Shares of Netflix have collapsed an almost unfathomable 66% year-to-date, and on Tuesday it reported that it lost 970,000 subscribers in Q2. That’s better than prior expectations of 2 million people ditching the platform but not exactly a win.
That report follows Netflix’s gloomy Q1 earnings when the company announced it lost 200,000 paid subscribers when it was expected to add 2.5 million users. Revenue growth, meanwhile, has slowed significantly from its double-digit highs amid the pandemic.
Netflix attributes its struggles to increased competition from the likes of Disney+, COVID, and the war in Ukraine. Oh, and the 100 million users watching without paying via shared usernames and passwords.
Netflix can try outgunning the likes of Disney (DIS) and its arsenal of properties including “Star Wars” and “Marvel,” but it certainly can’t do much about COVID or Ukraine. And it’s likely to face blowback when it begins charging users extra to share accounts.
That said, I’m actually interested in the prospect of an ad-supported version of the streaming service. That’s especially true at a time when inflation is pushing prices of everyday goods higher and the number of streaming services with must-see content seems to multiply every month.
But if Netflix wants its ad-supported tier to boost user growth, it’s going to have to make sure that the ads experience is better than what we get out of traditional TV ads.
Unfortunately, O’Connell explained, connected TV has, so far, taken some of the worst habits of TV and somehow made them worse. Specifically, O’Connell points to streaming services that are overrun with collections of back-to-back-to-back ads known as “ad pods” that play the same commercials over and over again until it feels like Mr. Clean is trying to brainwash you.
“It feels like we're overrun with ad pods and we're overrun with ads within the ad pods,” O’Connell said. “Who the heck is steering the ship? Why am I getting the same ad three times in a row?”
“It is challenging to manage the complexity of [connected TV] advertising,” O’Connell said. “If you're a publisher it feels more like getting the business rules in place and having the will to really improve the experience when that can feel like a risk to revenue.”
Fortunately, some [connected TV] platforms have already begun experimenting with unique ad formats that aren’t as aggressive or downright annoying. Roku, for instance, runs ads on its screen saver page and its main menu, keeping you from being bombarded while watching shows, while still getting plenty of eyeballs on those ads.
I’m willing to give it a shot. You should, too
Netflix is teaming with Microsoft to get its ad-supported tier off the ground. The Windows maker is already operating a multi-billion ad business, and adding those capabilities to Netflix should ensure that the streaming service’s ad tier is stable when it launches in 2023.
Right now Netflix is an in-the-background option for me. My wife and I switch it on when nothing else is on, or if we’re cooking or cleaning and need background noise. In those instances, an ad-supported option would be a welcome means to save some cash. We’re not exactly watching with rapt attention in those cases, so we wouldn’t mind a few ads now and then.
Again, as long as it’s not the same three ads playing in a row. Or too many ads relative to the length of the show or movie we’re half-watching.
When a cultural juggernaut like “Stranger Things” or “Squid Game” comes along, I could see us upgrading to a commercial free tier for a month or two to skip the ads. Once we finish the show, though, we could drop back down to the ad-tier.
Netflix readily admits in its Q2 earnings report that its dive into advertising will change over time, and that the final iteration will be far different from what it initially launches. It also promises to try to offer something better than the horrible experience we’ve grown accustomed to through traditional TV.
(Spencer Weiner/Los Angeles Times via Getty Images)
By Jay Hart
It seemed inevitable. Every time there was a nationally televised game from Dodger Stadium, the cameras would pan out beyond the outfield wall to show the “late-arriving crowd.”
As a kid growing up in Illinois, I always thought Dodger fans just didn’t care enough. As an adult transplant in L.A., I found out it had nothing to do with that and everything to do with traffic.
Bill Plaschke, the sports voice of the Los Angeles Times, penned a column recently that summed up perfectly the experience of attending a game at Dodger Stadium:
“Dodger Stadium is a distinctly wonderful place to watch a baseball game, but a most difficult place to attend a baseball game.”
That’s not necessarily unique in the baseball landscape. For me, Wrigley Field is the holy grail of baseball stadiums, but the bleachers — especially on a hot Friday afternoon — are an absolutely miserable experience, at least until you’re six Old Styles in. Fenway and its quirks are a bucket list experience until your neck begins to strain because your seat is facing right field, not home plate. And at Busch Stadium, you have to deal with Cardinals fans. Uggh.
The newer crop of parks do a solid job of enhancing the experience. Citizens Bank in Philly knocks it out of the park with the food. (Pro tip: skip the provolone, always go wiz.) Oracle Park in San Francisco has the best view in baseball, though PNC in Pittsburgh gives it a run for its money. And Chase Field in Phoenix has air conditioning.
All of them beat the experience of the Kingdome, where no one wanted to go inside on a sunny day in Seattle to watch Jay Buhner stand in the middle of dip-stained astroturf. Or Milwaukee’s County Stadium which, aside from the slide in the outfield, was a glorified high school park. Or old Busch Stadium where you had to deal with Cardinals fans. Them again.
Point is, for a lot of us, attending a game is more about going to a park where a baseball game happens to break out. It’s literally the only sport where leaving early isn’t frowned upon. So the particulars — getting there, parking, food, etc. — matter, especially if your team is 20 games under .500 at the break.
That’s clearly not a problem in L.A., where once again the Dodgers are among the favorites to go all the way. But the stadium?
“Once you are there,” Plaschke wrote, “in your seat, watching baseball’s most consistently great product play a baseball game, it’s heaven. But everything else about it can be hell.”
So tell us … what’s your favorite place to watch baseball, and what’s the worst?
Readers react: You've heard from us, now we want to hear from you. Hit us up at readandreact@yahoosports.com with thoughts on MLB stadiums or anything else in today's newsletter, and you might just see your words below.
"The biggest issue in all this is the potential sale of the Nationals, and I have to agree with Soto in one aspect ... who will be signing his checks and what are their plans? ... My advice, patience on both sides, Soto has two years left and his value isn't diminishing, see who the new owners are and their plan going forward and decide at the end of the 2023 season." — Shawn C.
"I don't blame Soto for turning down the extension. Despite what people think, most elite ballplayers want to go to a team they think can win or is in that direction. The Nationals have not yet shown that they are headed in that direction and have too much dead wood to be going there." — Matt G.
"And this pretty much sums up why I always seem to side with the owners, when labor disagreements pop up." — Shane S.
"Boo F’ing hoo. No one loves Sergio. His net worth is $70 mil … all from golf. Let him flip burgers for a month like real people do, and we’ll see if he starts singing a different tune. His next five generations will never have to worry about money. Suck it up and hit the little white ball into the hole and stop whining." — Bruce P.
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