What's New on Netflix: Advertisements
The company is trying out both pre- and post- roll ads for users in select markets.
Netflix is experimenting with advertisements that run both before and after users watch a video. It's unclear whether or not the company will eventually push ads to everyone.
For now, the company is primarily experimenting with the HBO model of pitching its own original programming to viewers. The company is only showing trailers for shows like Orange Is the New Black and House of Cards—it has not attempted to sell third party ads, and the company told me that, for the moment, only specific users in specific markets are seeing ads. Update: An additional spokesperson for Netflix tells me the company will not sell third party ads: "We do not and will not be adding third-party ads," he said.
The news was originally reported by Cord Cutters News, and was confirmed to Motherboard by Netflix.
"We are running a test to show some of our original programming," a Netflix spokesperson told me. "As with any Netflix product test, this may never come to all our members."
It's worth noting that, though Netflix hasn't had any ads so far, it has the potential to deliver much more targeted ads (which can be sold for higher rates) than a standard cable company. Netflix has a detailed history of every show you've ever watched, meaning it can infer your interests and so on.
If Netflix does indeed move to an ad model, it would add handsomely to its profits (assuming users don't jump ship)—some analysts have said the company will inevitably need to run ads to remain profitable. It'd also be a serious flip-flop for the company, whose top executives have repeatedly said there are no plans to introduce advertisements to the service.
"Internet TV is divorced of the need of advertising revenue because we can develop direct relationships with the consumer," Netflix chief product officer Neil Hunt said last year. Marketers "need to find a different place to advertise," he added.