Netflix isn't ruling out the idea of running ads on the streaming service in the future. On Tuesday, a senior executive acknowledged that while the company has no plans to roll out an ad-supported tier, it's not an impossibility.
"Never say never," CFO Spencer Neumann said at an investor conference, but noted "it's not something in our plan right now."
His response comes on the heels of Disney's announcement that it is adding a cheaper, ad-supported plan to Disney Plus in the U.S. later this year. Among other streamers, HBO Max already offers an AVOD plan, which costs $10 per month compared to the ad-free $15 tier. Peacock and Paramount also have $5 ad-supported plans (and Peacock has a free level).
Neumann noted, "It’s hard for us to kind of ignore that others are doing it, but it now doesn’t make sense for us."
The company is focused on its current business, which includes a push into video games. "We have a great model in the subscription business, it scales globally," he noted.
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Analysis: Netflix may have to run ads to grow
At the end of 2021, Netflix counted 221.8 million total paying subscribers worldwide. While that far exceeds Disney Plus at 129.8 million, Netflix is still under a lot of pressure from Wall Street to continue demonstrating growth and to boost revenue. Yet new subscriber sign-ups have slowed down recently, and could decelerate even more after raising prices in the U.S. and Canada.
A cheaper ad-supported tier could lure in Netflix hold-outs — people who balk at the current $15.49 Standard Plan (or even the $9.99 Basic Plan). Advertising money on top of increased sign-ups would certainly appease investors.
But running ads on Netflix would be a complicated endeavor. Although Neumann joked "it's not like we have religion against advertising," it sort of seems like they do. CEO Reed Hastings has previously expressed dubiousness about ads on Netflix.
"You know, advertising looks easy until you get in it," he told Variety (opens in new tab). "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."
And with more AVOD services out there, the competition for those ad dollars is even fiercer. With zero experience in that game, Netflix would be playing catch-up — and that's never been its style.
More likely, we'll see Netflix double-down on content by expanding the gaming experiences, experimenting further with interactive programming and perhaps venturing into live sports, like Apple TV Plus is doing with Friday Night Baseball.
In other Netflix news, Vikings: Valhalla has been renewed for season 2 and 3. Plus, here's our best guess at the Peaky Blinders season 6 Netflix release date.