Netflix with ads? ‘Never say never but it’s not in our plans’

Given Disney’s recently revealed plans to offer a cheaper, ad-supported tier of Disney+, questions are again arising around whether Netflix will ever embrace advertising.

At a Morgan Stanley investor conference today, CFO Spencer Neumann was asked about the potential for ads on Netflix and deferred toward building value by maintaining a positive customer experience.

“It’s not like we have religion against advertising, to be clear. What we’re focused on is optimizing for long-term revenue and big profit pools, and we want to do it in a way that is a great experience for our members,” he said. “We lean into consumer experience and consumer choice and what’s great for our creators.”

Neumann suggested that if at some point Netflix determines conditions are right to enter the advertising space, then it could happen. But probably not anytime soon.

“We think we have a great model in the subscription business. It’s scaled globally really well,” he said, pointing toward annual revenues around $30 billion. “Again, never say never, but it’s not in our plans. Other folks are learning from it so it’s hard for us ignore that others are doing it. But for now, it doesn’t make sense for us.”

Disney CFO Christine McCarthy appeared at the same conference earlier this week and offered up some details on the Disney+ ad-supported tier coming later this year.

Disney has experienced an “incredible amount” of advertiser demand since the launch of Disney+ in November 2019, said McCarthy, who added that results around addressable advertising on Hulu demonstrates that the company has more demand than it does supply.

McCarthy confirmed the upcoming Disney+ ad-supported service, which is scheduled for launch later in 2022, will be the lowest cost tier but suggested that the launch isn’t all about price sensitivity.

“Some people just don’t mind seeing ads. So, we look at this as something that’s going to be a win-win for the consumers who want it, the consumers who couldn’t afford it otherwise, and it’s also going to be great for the advertisers because we have a very unique audience,” she said, adding that Disney will be very careful about what ads are accepted and how they’re placed. She said Disney+ will have a “lighter ad load” and the ads will comply with child protection policies, COPPA regulations and domestic and international privacy laws.