For Netflix, advertising is not a sustainable solution to keep the streaming service competitive. Over the years, Netflix has become more an...
Over the years, Netflix has become more and more popular, so that today it has become the undisputed leader in this market. This popularity has been the subject of many rumours, including the rumour that Netflix is introducing advertising on its platform. A rumour that comes back regularly, despite the rebuttals of the main interested party.
But one might wonder whether advertising might not be a possible solution to bail out Netflix's coffers instead of regularly increasing the rates of its subscriptions. Some services have already succumbed to the temptation, such as Hulu and Peacock, but for Netflix director Reed Hastings, this is not the best solution.
The man reiterated his opposition to advertising on Netflix in an interview with Variety. For Hastings, the absence of advertising "is the belief that we can build a better company, a more valuable company [without advertising].
A proven strategy
"Advertising seems easy until you get there. Then you realize you have to extract revenue from other places because the total advertising market is not growing, and in fact, right now it's shrinking," he explained.
"It's a hand-to-hand battle to get people to spend less on, you know, ABC and spend more on Netflix. There's a lot more growth in the consumer market than in advertising, which is pretty stable. We went public 20 years ago at about a dollar a share, and now we're at [over] $500. So I would say that our subscription-based strategy has worked pretty well. But it's basically what we think is the best capitalism, as opposed to a philosophical thing.
TheNetflix director had already indicated in the past that, alongside such giants as Google, Facebook or Amazon, the streaming service would certainly not be able to compete for attractive advertising contracts.
It is therefore easy to imagine that advertising will not appear on Neftlix any time soon. The firm has been making it one of its key arguments for many years.