When it comes to Netflix’s strategy, two major topics of discussion usually comes up. The first is the discussion behind binge vs weekly and the second is whether Netflix has or perhaps needs to get into ads. Outgoing WarnerMedia head Jason Kilar thinks Netflix will have ads in the near future and until they do, they’re handing over an advantage to their competitors.
As mentioned the debate around ads on Netflix whether that be through a new tier is a debate we’ve seen unfolding for years. Many industry executives have always insisted that it’s inevitable it’ll have to happen at some point.
Netflix co-CEO Reed Hastings has always been adamant against Netflix having ads. In September 2020, Business Insider reported that Hastings suggested the reason the streaming giant doesn’t have commercials isn’t because of a philosophical stance, it’s because it’s the “best capitalism.”
Comments recently have softened with Netflix FO Spencer Neumann saying recently: “… 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.”
With slowing growth, we’ve seen lots of new think-pieces and analysts calling for Netflix to jump into the ad game. Netflix competitors certainly are with HBO Max having an ad tier introduced recently as well as an ad tier headed to Disney Plus later in 2022. Rivals Hulu and Paramount+ also take advantage of ad-tiers too.
Comments from outgoing WarnerMedia CEO Jason Kilar adds more fuel to the debate. The comments come from a recent all-encompassing interview conducted by Matthew Belloni as part of his new podcast for Puck News called The Town.
The 25-minute interview covered everything from HBO Max’s controversial “project popcorn”, to the recent launch of CNN+ and the competitive landscape of streaming. Kilar notably says there’s currently a “three-horse race” to a billion subscribers with those horses being Netflix, Warner Media, and Disney.
The topic of ads came up when talking about the best way to grow.
“The way you get a billion is not by continuing to charge a premium price that’s ad-free. The way you get there is by of course having an ad-free premium price version of your service but also offering a lower more attractively priced option that’s made possible with the presence of thoughtfully executed advertising.”
Kilar continued, “That’s not something that Netflix has not been willing to do. We, of course, couldn’t start it soon enough because we recognize that these things are all about people’s household economics and we want to make this service as affordable as possible to as many people on the planet.”
When questioned whether Netflix will ads in three years, Kilar responded “Yes they will absolutely get to that conclusion,” adding “I suspect the religion they currently have about not having ads will change in time because offering consumers lower price is a really good strategy.”
Do you think Netflix should have an ad tier or not introduce ads under any circumstances? Let us know in the comments.