Netflix has no plans to introduce ads to its subscription service, now or at any point in the foreseeable future.
In spite of Netflix having never served ads, or publicly suggested it wanted to, many have not only suspected, but outright suggested Netflix needs to add ads to keep up with market changes. Netflix, disagrees.
Following the company’s fourth quarter results confirmation, Netflix CEO, Reed Hastings took part in an earnings interview. During the conversation the topic of ads on Netflix came up once again – as it does most quarters. Also, consistent with most quarters, Hastings denied any intention to sell or deploy ads to subscribers.
Compared to previous denials, this one appeared to be intended to really drive home why Netflix doesn’t want to get into the ad business and that’s likely a result of the recent and sustained suggestions that Netflix has no choice. According to Hastings, nothing could be further from the truth with the CEO stating the company’s “best business model” was a “simpler business model.” Adding that investing is ads is not the “easy money” solution many think it is.
Netflix staying away from data issues
Besides arguing that Netflix would have to spend big to compete with the big operators in the ad space, Hastings also made the case that Netflix is far happier to stay as far away from data issues as possible.
With the ad business being such a heavy data and tracking-driven industry, Hastings suggested that’s just another example of a business model that’s too complicated compared to what the company wants to offer. For example, Hastings spoke of Netflix in terms of being a “safe respite” from the world, including its continued concerns surrounding data privacy
During the interview, Hastings confirmed that Netflix doesn’t really collect any data at all. At least not any that would be considered highly valuable beyond its own algorithms that look to recommend content. To get into ads, and to a level where it would be worth the entrance fee, Netflix would have to significantly invest time and money.
Both are compromises the company doesn’t feel it needs to make right now. Especially on the day when Netflix confirmed more than $5 billion in revenue for the fourth quarter, and over $20 billion throughout 2019.