Netflix used to completely reject the idea of adding a commercial-supported tier, but executives appear to have warmed up to the idea. Just days after Disney announced plans to roll out an ad-supported version of Disney+ in the future, Netflix CFO Spencer Neumann said Tuesday it isn’t being ruled out. However, don’t expect an ad-supported Netflix to launch any time soon.
“It’s not like we have religion against advertising, to be clear,” Neumann said during Morgan Stanley’s 2022 Technology, Media & Telecom Conference, reports Variety. “But that’s not something that’s in our plans right now… We have a really nice scalable subscription model, and again, never say never, but it’s not in our plan.”
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The subject of an ad-supported Netflix came up when Neumann was asked to respond to Disney’s new plan to launch a version of Disney+ with ads later this year. It is hard for Netflix to ignore moves like that, but “it now doesn’t make sense for us,” Neumann added. He later joked that he doesn’t “think I’ll get” the ad-supported Disney+ himself.
Netflix is soon going to be alone among major streaming platforms without an ad-supported tier. Paramount’s Paramount+ platform and WarnerMedia’s HBO Max both have ad-supported plans. Disney also owns Hulu, which has an ad-supported tier. Neumann believes many of Netflix’s rivals are “losing a lot of money” by offering low-price tiers.
While Netflix continues to work without support from commercials, the service has passed the increasing costs of production to consumers by raising prices in the U.S. and Canada. Neumann admitted Tuesday that the most recent price jump was partly responsible for slow growth in the first quarter of 2022. “At the end of the day, we’re pricing for what we believe is the value we provide,” he said to defend the price jumps.
At the end of last year, Netflix had 221.8 million paying subscribers worldwide, but there’s still room for growth, according to Neumann. The company is “small relative to every kind of metric we look at, whether it’s the hundreds of billions of dollars spent directly on direct-to-consumer entertainment” or almost 1 billion broadband households around the world (not including China). Even in the U.S., Nielsen estimates that Netflix has just a 10% share of TV time, notes Variety.
Elsewhere during Tuesday’s event, Neumann was asked about Netflix’s decision to stop service in Russia after President Vladimir Putin ordered an invasion of Ukraine late last month. Netflix has a small footprint in Russia but was working on a few original productions there that were also suspended. “I’d be remiss if I didn’t lead with, it’s just a horrible tragedy, and our hearts go out to all that are impacted in Ukraine in that part of the world,” Neumann said, later adding that, “relative to the opportunity… we decided to suspend our operations there.”
