Netflix calls speculation that it's moving into selling advertising 'false'

Netflix Stranger Things Coca-ColaA Netflix and Coca-Cola promotion for &quotStranger Things."Brian Ach/AP Images for Coca-Cola

  • Netflix is ad-free and plans to stay that way, the company reminded investors on Wednesday, as it reported weaker than expected subscriber growth for the second quarter.
  • "When you read speculation that we are moving into selling advertising, be confident that this is false," the company said in a letter to shareholders.
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Netflix is ad-free and likely to stay that way.

The streaming-video giant said it still has no plans to start selling advertising, in a letter to shareholders on Wednesday, which also reported weaker than expected subscriber growth for the second quarter.

Read more: Netflix plunges more than 10% after a huge miss on subscriber growth during Q2

Speculation was renewed after media executives at the annual Cannes Lions advertising festival debated whether Netflix was fated to get into the advertising business eventually, as CNBC reported.

Analysts at Nomura also estimated in June that a free, ad-supported package, similar to Spotify's freemium model, could bring Netflix roughly $1 billion more in revenue a year.

Read more: Netflix could drastically cut its cash burn with a Spotify-like model that includes an ad-supported free tier

"When you read speculation that we are moving into selling advertising, be confident that this is false," Netflix said in the investor note. "We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction."

The company compared itself to premium-TV network HBO, which also doesn't air commercials.

Netflix has been working more publicly with brands recently in other ways, such as through merchandising and partnerships to promote its original shows and movies. But it said it's not pursuing those relationship to make more money.

Netflix said it "is optimizing for fan and viewer engagement over revenue maximization," with those efforts, including its co-marketing deals with companies like Coca-Cola, Burger King, and Baskin-Robbins around the recent return of "Stranger Things."

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