Netflix advertising on their programs? It is a discussion point that has continued to pop up in regards to the streaming giant. Recently, Netflix CEO Reed Hastings released a book, “No Rules Rules: Netflix and the Culture of Reinvention,” co-authored by business professor Erin Meyer, and he has been making the interview rounds to promote it.
Of course, the subject of Netflix advertising on its platform has come up during these interviews. There have been rumors ever since 2018 that Netflix was going to try and integrate ads in some way. Whether that involved a differently priced subscription plan like Hulu offers or simply placing ads for other Netflix shows into binge watches, the looming specter of ads on Netflix continues to rear its head.
Now, Hastings has been asked point-blank if Netflix advertising during its programs is something that will happen. Is it a hard and fast rule that ads will never come to Netflix? “It’s definitely not a rule,” says Hastings. “It’s a judgment call… It’s a belief we can build a better business, a more valuable business [without advertising].”
Hastings goes on to talk about the challenges Netflix advertising would actually entail. “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.” Hastings makes a valid point here in regards to the ad market and what it can offer a service like Netflix. “It’s hand-to-hand combat to get people to spend less on, you know, ABC and to spend more on Netflix.”
In regards to Netflix advertising, Hastings argues that the consumer market is seeing much more growth than the advertising market. Therefore, it does not make sense for the company to spend time, energy, and money in the world of advertising when the consumer market is more than willing to pay for an ad-free experience. “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,” Hastings says.
However, this does not mean that Netflix advertising is not a possibility in the future. Hastings mentions that the whole reason behind not having ads is a capitalistically minded decision and not “a philosophical thing.” This would seem to indicate that keeping ads off Netflix is going to remain the status quo until a better business opportunity involving ads comes along.
Still, Hastings seems more than happy with where the company is without ads. Netflix advertising during its programs could potentially disrupt the brand loyalty of subscribers, and Hastings seems very aware of how important that is to their subscriber-based service. As of 2020, testing out ads on Netflix has not been confirmed to be in the works. Hopefully, Netflix can continue to be profitable without ads and they can keep offering the same service they have.
Netflix advertising does not sound like it is going to be in the pipeline any time soon. You will still be able to enjoy your episodes of Stranger Things without worrying if you are going to be sold a Coke in the middle of it. Well, they sort of already did that, didn’t they? Guess there is more than one way to get “ads” on Netflix.