Netflix may have thought about it, but the company won't be bringing ads to its streaming service.
Speaking to Fast Company in an interview posted today, Netflix Vice President of Corporate Communications Steve Swasey said the topic of bringing advertising to the company's streaming service has been brought to the table from time to time over at Netflix headquarters in Los Gatos, Calif., but the arguments in favor of ads haven't been all that compelling.
"Every time, we shoot it down," Swasey said.
Netflix's streaming service has relied on a subscription model since its launch. Previously, customers that had unlimited DVD rental plans were allowed to stream content from Netflix for as little as $9 per month. After launching a streaming-only service in Canada last year, Netflix then brought a streaming-only option to the United States as well. It costs $7.99 per month.
The success of Netflix streaming has caused the company to shift its focus. In a statement to investors last year, CEO Reed Hastings said that "by every measure," Netflix is "a streaming company that also offers DVD-by-mail."
Netflix's decision to nix the idea of bringing advertising to its service stands in stark contrast to the strategy of one of its top competitors, Hulu Plus, which offers a subscription fee--$7.99 per month--and places ads in the content it streams.
Hulu's ad-supported model has been met with some complaints from users who would like to see the commercials go. However, Hulu claims on a Web page detailing its business model that advertising is necessary to keep the price of its service down.
"Hulu's goal for this subscription product has always been to offer the largest content selection to users for the lowest price," the company writes on its Web page. "By making Hulu Plus an ad-supported subscription service, we were able to offer the low price of $7.99 to subscribers for the deepest library of current TV programming online."
Netflix, on the other hand, isn't after "current" content. Swasey told Fast Company that Netflix prefers "to have complete seasons of the series rather than day-after broadcast." Perhaps most importantly, Netflix can offer that content and push cash into the hands of content providers without relying on advertising to pull it off. And Swasey believes that model works best for all stakeholders.
"Netflix is a new money provider," Swasey told Fast Company. "This is new money in the system, which is good for content owners."