Netflix Confirms Talks to Introduce Ads to Its Platform

Netflix has confirmed that they are having conversations surrounding an advertisement supported tier of their service. Deadline reported that CCO Ted Sarandos spoke about the topic at Cannes Lions advertising conference. While there to accept the Entertainment Person of the Year award, the executive talked about a bunch of issues facing the future of the company. However, the idea of whether or not to include ads is not one of them. Sarandos made that plain, the only determination they’re making over at the red brand is whether or not to own their ad platform or have an outside entity help run that. The CCO said, “If it becomes so important [that] we want to have control over it, we might.” So, it’s full steam ahead on that front. Users are mixed on the idea, a lot of people famously think that the money they spend on a streaming service should be used to supplement ad revenue, but the company doesn’t quite believe that.

The CEO also had a comment about this topic earlier this year. “Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Reed Hastings revealed. “But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant get what they want, makes a lot of sense. It is pretty clear that it is working for Hulu. Disney is doing it, HBO did it. We don’t have any doubt that it works,”

In a previous release, Netflix clarified their intent to shareholders after their revenue growth slowed this year. “Our revenue growth has slowed considerably as our results and forecast below show.” Also in this letter, they told the investors that shortcomings could be blamed on password-sharing in the meantime. 

“Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds,” they continued. “The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we’ll be holding our operating margin at around 20%.”

Would you use an ad-supported Netflix tier? Let us know down in the comments!