Netflix CEO Reed Hastings took some time out of Tuesday afternoon’s presentation of the streamer’s fourth-quarter earnings — during which it revealed some headline-making viewership data related to its slate of originals — to reiterate a promise that will no doubt make users of the service happy. Unlike smaller rivals like Disney+, Hulu, and NBC’s new Peacock streamer, to name a few, Netflix is once again promising to never launch any kind of ad-supported subscription package. And, moreover, any speculation that it’s in the throes of doing so or even thinking about it is, according to the company, “completely false.”
“We want to be the safe respite where you can explore, get stimulated, have fun, enjoy, relax — and have none of the controversy around exploiting users with advertising,” Hastings said during an official earnings interview moderated by Guggenheim Securities’ Michael Morris.
Netflix and its chief executive have to regularly throw cold water on the possibility of advertising because, in spite of their denials, the notion is still talked up so much within the investment analyst community. Last year, for example, analysts at Nomura estimated that Netflix could instantly realize an additional $1 billion per year thanks to ad revenue if the company ever decides to turn that on — as if it’s as easy as throwing a switch, never mind all the complexities that come with it such as a sales force needing to be hired, not to mention the inevitable customer blowback.
Oh, and to say nothing of the difficulty of competing for advertising against the tech giants that now form a nearly impregnable ad duopoly.
“Google and Facebook and Amazon are tremendously powerful at online advertising, because they’re integrating so much data from so many sources,” Hastings continued during his remarks. “I think those three are going to get most of the online advertising business.” While if Netflix even wanted to build a sustainable $5 billion to $10 billion advertising business, it would need to “rip that away” from incumbent players, which is why Netflix thinks that “Long term, there’s not easy money there.”
This doesn’t mean, however, that Netflix doesn’t see creative branding-related opportunities outside of the practice of merely shoving an ad in a viewer’s face. In addition to building out a consumer products team, the streamer has been seizing on partnerships whereby it can promote its original content, like the tie-up with Ben & Jerry’s for an official Netflix ice cream flavor that we recently reported. Definitely look for the streamer to do more of that in the future.
