Netflix is taking the streaming experience to an all-new low, saying it will use AI to power midroll, pause ads, and third-party data sharing with “trusted partners.”

Netflix is one of the leading streaming platforms, and one that profits billions of dollars per year. Despite being highly profitable, thanks to its paid plans, the company has invested heavily in creating an ad platform to squeeze out every last bit of potential profit.

In its latest announcement, Netflix says it plans to leverage the power of generative AI to further its ad ambitions. Amy Reinhard, Netflix’s President of Advertising, announced the changes at the company’s third Upfront, saying the company now has 94 million monthly active users and touting the platform’s viewer engagement.

“When you compare us to our competitors, attention starts much higher and ends much higher. And even more impressive, members pay as much attention to mid-roll ads as they do to the shows and the movies themselves,” she said.

Netflix’s competitive advantage is its “ability to marry art and science, combining best-in-class technology with the shows and movies that everyone is talking about and watching,” Reinhard explained. “So while a lot of companies are either/or — either they have great technology, or they have great entertainment — our superpower has always been the fact that we have both. And because our audience is unique, engaged and attentive, a dollar spent on Netflix is more valuable than a dollar spent anywhere else.”

Netflix’s Ad-Driven Enshitification

Reinhard goes on to describe four specific ways in which Netflix plans to expand its advertising platform.

• Enhanced Data Capabilities: With Netflix Ads Suite, advertisers can now incorporate their first-party data, either through LiveRamp or directly with Netflix, so clients can match data sets for behavioral insights and targeting capabilities against Netflix’s ads audience. Netflix also opened third-party data access to trusted partners like Experian and Acxiom and announced our own clean room strategy, where we can collaborate in a private, secure environment on everything from planning and activation to measurement. All while protecting the privacy of our members.
• More Buying: We know how important it is to make buying easy, including programmatically. The Netflix Ads Suite will offer more options and deal types, allowing clients to transact in whatever way works best for them.
• Expanded Measurement: Today, Netflix announced the development of new first-party measurement solutions, starting with a brand lift capability tying viewing behaviors to consumer brand perceptions.
• Creative Formats: Netflix debuted a new modular framework for ad formats that leverages generative AI to instantly marry advertisers’ ads with the worlds of our shows. This will create a better, more relevant experience for our members and drive the best results. Reinhard unveiled the first capability with interactive midroll and pause formats that build custom advertising creative with added overlays, call to action, second screen buttons, and more to serve the right ad to the right member at the right time. These formats will be available by 2026 in all ad-supported countries.

Why Neflix’s Announcement Is a Big Deal

There’s are some key takeaways from Netflix’s announcement, none of which are good news for consumers.

First is the company’s revelation that it will be selling third-party data access to “trusted partners,” including the lies of Experian. Putting aside the fact that Experian itself suffered a massive data breach in 2015, the bigger question is why a person’s streaming habits should in any way being linked to a credit reporting agency.

Second is the company’s double-speak in regard to its commitment to privacy. The company says it use a “clean room strategy, where we can collaborate in a privacy, secure environment on everything from planning and activation to measurement. All while protecting the privacy of our users.”

At the same time, however, Netflix says “clients can match data sets for behavioral insights and targeting capabilities against Netflix’s ads audience,” and that it wants to focus on “tying viewing behaviors to consumer brand perceptions.”

Third is the company’s plans to serve midroll ads, which is just a nice way of saying users’ viewing experience will be interrupted to show ads. In addition, Netflix will show ads when a program is paused.

Why It All Matters

Streaming was once touted as the answer to cable and satellite TV options, giving users more freedom and the ability to watch what mattered to them. Netflix originally led the charge, and genuinely offered a solid experience at a fair price.

In the intervening years, however, Netflix has raised prices, dropped its Basic plan in favor of a paid ad-supported plan, and now is mining as much data as possible and sharing with third-party companies.

As we have said at WPN many times, it’s one thing for a free service to use ads to be profitable. It’s an entirely different matter for a company to charge a fair price for the service it provides, and then still insist on serving ads, mining user data, and sharing that data with third parties.

Netflix has put itself squarely in the latter category, and the streaming market will be far worse for it.

Louis Rossmann, the famous right-to-repair and privacy advocate, breaks down Netflix’s decision even more. While we do not endorse his advice to pirate content, he nonetheless makes valid points about the declining state of the streaming market.