Netflix could lose a lot of subscribers if it shows ads, research says

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Netflix began testing video promos between episodes last month. (Netflix)

Netflix found itself in hot water with subscribers last month when the company began testing video promos between episodes. New research suggests the practice could really cost the company.

Hub Entertainment Research’s new TV study, “The Future of Monetization,” spoke with 1,612 TV consumers (ages 16 to 74) and found that a significant number of them would consider dropping Netflix if it begins showing ads during shows. About 23% of respondents said they definitely or probably would cancel their service in that scenario.

Considering that Netflix has more than 135 million subscribers (more than 58 million in the U.S. and more than 77 million internationally), losing 23% of its streaming customers would be a significant blow to the company.

According to the same study, 23% of respondents said they would drop their Netflix subscription if the company raised monthly subscription rates by $5. But if Netflix raised its price by $2, only 8% of respondents said they would cancel.

The survey also questioned how consumers would respond to an SVOD/AVOD hybrid approach from Netflix, where it began showing ads but prices were lowered by $3 per month. At that price with ads, the percentage of respondents who said they’d cancel dropped down to 16%.

RELATED: Netflix defends its tests of video promos between episodes

The research, which was collected in August 2018, is capitalizing on the outrage Netflix sparked last month when it began testing show promos in between episodes. The feature drew the ire of several users, but Netflix was quick to defend its actions.

"We are testing whether surfacing recommendations between episodes helps members discover stories they will enjoy faster," Netflix said in a statement. "It is important to note that a member is able to skip a video preview at anytime if they are not interested."

The company told CNN that it tests new features all the time and that most new features aren’t adopted.

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