“There’s Not Easy Money There”: Netflix Vows To Leave Online Advertising To Google, Facebook And Amazon

July 30, 2018 Los Gatos / CA / USA - Netflix logo in front of their headquarters situated in Silicon Valley; south San Francisco bay area

There has long been speculation over whether or not it would be beneficial for Netflix to run ads on the service.

With the streaming space growing increasingly crowded, an ad-supported model would serve as a way for Netflix to potentially undercut competitors like Disney+ and Apple TV+.

Nomura Instinet analyst Mark Kelley last year said Netflix stands to make an extra $1 billion per year if it were to introduce advertising.

But speaking on the company earnings call for 2019, Netflix CEO Reed Hastings laid out the logic behind Netflix’s refusal to sell ads.

“Google, Facebook and Amazon are tremendously powerful at online advertising because they’re integrating so much data from so many sources,” he said.

“There’s a business cost to that, but it makes the advertising more targeted and effective. So I think those three [companies] are going to get most of the online advertising business.

“To grow a 5 or 10 million dollar advertising business you have to rip that away from other advertisers – say Google, Facebook and Amazon – which is quite challenging.

“In the long-term, there’s not easy money there.”

Rather than pouring money into an advertising service, Netflix will continue to invest in content, something it believes “drives word-of-mouth, improves retention and grows paid memberships”.

“We have a much simpler business model, which is just focused on streaming and customer pleasure,” Hastings continued.

“So we think with our model we’ll actually get to a larger revenue, a larger profit, larger market cap because we don’t have the exposure to something that we’re strategically disadvantaged at, which is online advertising against those big three.”

Hastings’ defiance came as the company reported $US20 billion in revenue for 2019 and $US5.47 billion in revenue for the fourth quarter.

Paid subscribers also grew year on year by more than 167 million.

 




Please login with linkedin to comment

Advertising Facebook Google Netflix

Latest News

Beware The Bad Guy. Billie Eilish Fans Brace Themselves For Scammers
  • Media

Beware The Bad Guy. Billie Eilish Fans Brace Themselves For Scammers

Ticket sales to the Australian tour of American singer Billie Eilish have only just started, but criminals are already rubbing their hands with glee. Some fans are complaining about ticket prices that are higher than to Taylor Swift’s shows. Experts say this will increase demand for cheaper tickets in the resale market and the risk […]

Twilio Names Chris Koehler As CMO
  • Marketing

Twilio Names Chris Koehler As CMO

Twilio, the customer engagement platform that drives real-time, personalised experiences for today’s leading brands, today announced that Chris Koehler has been appointed CMO. Koehler brings more than 25 years of expertise in customer engagement and marketing technology, and a proven track record of driving growth and innovation at industry-leading companies. As CMO, Koehler will report […]

ARN Announces Ad Sales Partnership With The Athletic
  • Media

ARN Announces Ad Sales Partnership With The Athletic

ARN’S iHeart has announced an ad sales partnership in Australia with The Athletic, one of the world’s largest digital sports publishers. The alliance aims to radically expand the Australian sports podcast landscape, offering significant access and opportunities for advertisers to engage a previously untapped audience at scale. The Athletic is renowned for its compelling storytelling […]

Burger Wars Continue As Hungry Jack’s Brings Back The Big Jack & Mega Jack
  • Campaigns

Burger Wars Continue As Hungry Jack’s Brings Back The Big Jack & Mega Jack

The moment Australia has been waiting for is here – The controversial Big Jack is back! With a much-anticipated return, Hungry Jack’s is gunning to set the nation’s taste buds alight as the iconic Big Jack and Mega Jack return to menus nationwide, for a limited time only. The burger wars reignite as The Big […]

Diverse Voices, Sustainable Choices: Natalie Dean-Weymark On Why Sustainability Is A Non-Negotiable
  • B&T Exclusive

Diverse Voices, Sustainable Choices: Natalie Dean-Weymark On Why Sustainability Is A Non-Negotiable

With sustainability a growing concern in all facets of life, there is an increasing need for diverse attitudes and minds within the media industry, driving the cause for positive change. As a B-Corp-certified PR and digital marketing agency, Compass Studio understands this need. The agency supports ethical, environmentally friendly, impact-led brands, utilising strategic storytelling to […]

New Partnership Between The Sweetshop And The Gardening.Club
  • Advertising

New Partnership Between The Sweetshop And The Gardening.Club

The Sweetshop is set to unveil a partnership that marks a new chapter as they join forces with futurist Tomas Roope and renowned AI artist Jacqui Kenny. The partnership is named ‘The Gardening.Club’, drawing upon the fact that Tomas has used the “gardening” metaphor for years to explain how A.I. is radically changing the creative […]

Concrete Playground Debuts Innovative Urban Exploration Platform With Lexus As Launch Partner
  • Advertising

Concrete Playground Debuts Innovative Urban Exploration Platform With Lexus As Launch Partner

Concrete Playground announced the launch of its redesigned website in partnership with Lexus. This partnership introduces a new era of urban discovery, enabling a deeper, more intuitive engagement with cities through a state-of-the-art digital platform. Revolutionised Digital Experience Concrete Playground’s website has undergone a significant transformation, designed to enhance the way users interact with their […]