Netflix CFO, Spencer Neumann spoke yesterday at an investor conference and touched on a subject that has long been floated around as a potential revenue boon for the streaming giant: A lower-cost, ad-supported membership tier. While executives at the company have rejected the idea outright in the past, Neumann seemed more open to the possibility as reported by Variety.
“It’s not like we have religion against advertising, to be clear,” said Neumann, while speaking at Tuesday’s Morgan Stanley 2022 Technology, Media & Telecom Conference. “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.”
It should probably be noted that the language used here is not indicative of an ad-supported subscription plan coming anytime in the near future, but it does present a different tone than what CEO, Reed Hastings has been on the record as saying, as recently as two years ago. Around that time Hastings touched on the crowded online advertising space being dominated by Google, Amazon, and Facebook:
“I think those three are going to get most of the online advertising business ... We want to be the safe respite where you can explore, get stimulated, have fun, enjoy, relax — and have none of the controversy around exploiting users with advertising.”
Bucking trends— Netflix has famously made its bones by going against the grain. There was a time when no one thought people would want DVDs mailed to their homes. Even the fact that the company has invested heavily into original content, set a precedent for how streaming services approach their business.
Resorting to a subscription model that contains ads is something that Netflix has stayed away from as long as possible, despite its competitors like Hulu and HBO Max, offering this kind of service. Maybe it’s telling that Netflix raised its rates at the beginning of this year, following a period where the company saw most of its growth (more than 90 percent) concentrated in regions outside North America.
Neumann was also asked about Netflix’s decision to suspend its services in Russia, amidst the ongoing war in Ukraine. He touched on the difficulty of receiving payments in “a pretty complex regulatory market,” as well as the “obviously moral,” issues involved with doing business in Russia, which makes up a small portion (less than 1 percent) of the streaming service’s total revenue pie.