March 8, 2022
On the heels of rival subscription streaming video service Disney+ saying it would roll out a less-expensive ad-supported option this year, Netflix is not joining the growing bandwagon of SVOD platforms adopting ad-supported options.
Speaking March 8 at the Morgan Stanley Technology, Media & Telecom confab, CFO Spence Neumann said he doubted he would a do “show of hands” in favor of Netflix adopting an ad-supported streaming option. At the same time, the executive reiterated that the SVOD pioneer isn’t against the concept either.
“It’s not like we have religion against advertising to be clear,” Neumann said. “I mean, we’re focused on optimizing for long-term revenue, big profit pools. And we want to do it in a way that is a great experience for our members.”
Neumann said Netflix is currently about a $30 billion annual business, up 50% from $20 billion in revenue three years ago without advertising. During that period, the streamer added 28 million subscribers in 2019, 37 million in 2020, and 18 million in 2021.
Disney announced it would launch an ad-supported Disney+ option as the company eyes at least 230 million to 260 million global subs and direct-to-consumer business segment profitability by 2024. Netflix ended 2021 with 222 million subscribers.
Neumann contends that an ad-supported plan is not in the streamer’s wheelhouse at the moment. Indeed, Netflix added 1.2 million North American subs in the most-recent fiscal period — the service’s strongest domestic sub growth in past three years.
“We think we have a great model in the subscription business,” Neuman said. “It scales globally, really well. Again, never say never, but it’s not in our plan, but other SVODs are learning from it. So, it’s hard for us to kind of ignore that others are doing it, but it now doesn’t make sense for us.”