Netflix is preparing us for ads

Investors don’t let untapped streams of revenue last forever. Just listen to an investor call for Southwest. Bag fees are coming.

Netflix has been a disruptive force in the entertainment industry from day one with everyone else trying to play catch up. Whether the industry was bloated and ripe for disruption or Netflix just harnessed the power of emerging technology better than anyone else is a topic for another day. The important fact is that Netflix has risen to the top of the entertainment industry due to unrelenting focus on user experience. Part of that has been eliminating all forms of friction and interruption in our viewing experience (remember the dark ages when the next episode of Breaking Bad didn’t automatically play?).

That is until now. Netflix announced recently that they are rolling out choose your own adventure shows/movies for kids. Seems innocent enough, right? Or is Netflix training the next generation of its users to become accustomed to interruptions in the streaming experience to interact with the content and then moving on with the rest of the show.

If we take a moment to think about the future of the entertainment industry, Netflix probably doesn’t have a choice. Everything might be humming along for the disruptors in Los Gatos right now, but it has become apparent that there is an arms race to see who can pay the most for content. One might even argue that there is a content bubble (does anyone actually think Oath will be around in 10 years?). With the behemoth in Seattle as one of Netflix’s main competitors, you can be certain that the price of content is only going up. If another purveyor of streaming content finds a way to generate revenue from advertisers, imagine how much more they would be able to pay for content. A show/movie with products consumers are willing to purchase mid-stream becomes a lot more expensive.

It is reasonable to argue that if Netflix ignores this, someone else won’t. And that someone else will rake in the cash from advertisers desperate for our eyeballs and our attention. The reason I am hoping Netflix steps up to the plate is their obsession over user experience. Undoubtedly, Netflix would never subject us to the horrible, intrusive, irrelevant, obnoxious display ads that are ubiquitous on the internet. Something more along the lines of “Siri, buy the dress that Robin Wright is wearing” seems more likely. Zero friction to purchase. Zero interruption to our media consumption. Lots and lots of dollars to be made by marketers (maker of the dress), content makers (movie/TV studios that put Robin Wright in the dress) and content distributors (Netflix). The technology, contracts and logistics required to create this experience are not nearly enough of a barrier to prevent this from happening. It is only a matter of training consumers to get used to this behavior.

Which brings us back to the latest advance in Netflix’s user behavior. We are being trained to interact with the content Netflix provides us. We will become used to the show pausing (not just to make sure we are still alive after streaming 17 consecutive episodes of Better Call Saul). We will be trained to interact with the content. And (somewhat ironically) Netflix’s number one competitor has already trained us to use AI to make purchases.

For this all to work, marketers will need to be willing to adapt as well. There already appears to be appetite for this kind of disruption. Head of marketing at P&G, Marc Pritchard has been denouncing the digital marketing landscape for a number of reasons recently. Mr. Pritchard is probably not alone in his frustration, just alone in that he is not afraid of Google and Facebook. He realizes that online advertising is a HORRIBLE experience for his consumers. It is a process for him that lacks transparency and reliable attribution to sales. What Netflix can provide Mr. Pritchard is a seamless consumer experience, direct attribution to sales, and (hopefully) a very transparent experience for those that are writing the checks for the advertising dollars. Sure, he could very well be placated with a marginally more transparent model from Facebook and Google — just like we all would have been thrilled with slightly more customer friendly service from traditional taxis. Netflix has the chance to change the world of marketing for the better. Let’s hope they get it right.