Netflix refuses to show ads, and this is a key part of its identity. The company believes that subscribers will get a better experience if ads are killed, and it seems the company has no plans to change this policy.
Networks cutting back on ads
Netflix and users in general have benefited from this stance.
Howard Shimmel, a chief research officer at Time Warner, told Bloomberg last year, “We know one of the benefits of an ecosystem like Netflix is its lack of advertising. Consumers are being trained there are places they can go to avoid ads.”
Shimmel said once a subscriber gets used to a no-ads experience, ads become more and more frustrating. For this reason, some networks are cutting back on the amount of ads they show to lure back the younger generation. For example, TruTV halved the amount of ads it showed last year.
An important question that arises here is exactly how many ads are subscribers able to avoid by replacing TV with Netflix?
Netflix saving you from many ads
Cordcutting.com, a streaming data site, recently did some number crunching and found that watching Netflix helps subscribers save about 160 hours of commercials per year. The research firm took Netflix’s recent 75 million subscriber mark and then combined it with a statement CEO Reed Hastings made, according to which subscribers stream 125 million hours every day.
This means that every subscriber streams for about 1.67 hours on a daily basis. Then they referred to Nielsen data, according to which the typical hour of cable TV include 15 minutes and 38 seconds of commercials. When combined with Netflix’s subscriber data, it was found that each subscriber is able to avoid around 158.5 hours of commercials per year if they opt to watch Netflix instead of cable TV.
On several occasions, Hastings has talked about an important caveat, which is that the streaming firm is not competing just against cable, but rather, it is competing against all forms of entertainment.
“So it’s unlikely that every hour a Netflix subscriber spends binge-watching would necessarily be spent watching cable in a non-Netflix world,” says Business Insider.
In premarket trading today, Netflix shares were trading down. Year to date, the stock is down by over 20%, while in the last one-year, it is up by over 12%. The stock has a 52-week high of $133.27 and a 52-week low of $79.95.