Netflix Co-Founder Reveals Why He Won’t Bring Advertising to Service

Over the past decade, Netflix has grown from a niche subscription service to a streaming titan, with a roster of movies and TV shows that millions of people are checking out. While the service’s prices have gradually (or sometimes drastically) grown over the years, many have still found themselves consuming Netflix content, especially in its binge-worthy format. While other streaming services have taken different approaches to try to beat Netflix – including, in the case of platforms like Hulu and Peacock, offsetting lower subscription prices with advertisements and commercials during content. According to Netflix exec Reed Hastings, there isn’t a chance that Netflix will follow suit.

“It’s definitely not a rule. It’s a judgment call… It’s a belief we can build a better business, a more valuable business [without advertising],” Hastings recently explained to Variety. “You know, advertising looks easy until you get in it. Then you realize you have to rip that revenue away from other places because the total ad market isn’t growing, and in fact right now it’s shrinking. It’s hand-to-hand combat to get people to spend less on, you know, ABC and to spend more on Netflix. There’s much more growth in the consumer market than there is in advertising, which is pretty flat. We went public 20 years ago at about a dollar a share, and now we’re [more than] $500. So I would say our subscription-focused strategy’s worked pretty well. But it’s basically what we think is the best capitalism, as opposed to a philosophical thing.”

So, Netflix probably won’t be introducing advertisements anytime soon. But the streaming service has introduced some surprising – and occasionally controversial – new features in recent years. These include the option to turn off autoplay previews, the ability to remove movies from your “Continue Watching” category, and even the ever-elusive ability to shuffle play episodes of a certain show. Late last year, the company began testing a feature to let viewers watch programming at faster or slower speeds, something that was quickly met with backlash from the film and TV communities.

“It’s very challenging for any large and older institution that has a set of processes and values to change materially,” Hastings continued. “So I don’t that that’s a big risk. In fact, in many things, we cooperate with the other entertainment companies — like antipiracy, those kinds of things. It’s not like they are our mortal enemy, and if they have great titles it grows the total market as opposed to taking away from us. It’s kind of like a race where we’re all trying to please the consumer, but there’s multiple winners in the race. And sure, we would like to get the gold medal, but silver’s awfully good too.”