Netflix gave a detailed explanation of why it won't sell advertising, but it's still working with brands in other ways

the crown

Netflix

"The Crown"

  • Netflix on Tuesday gave its most detailed explanation yet for why it won't sell advertising.
  • It doesn't want to spend money trying to challenge online-advertising giants like Google and Facebook, CEO Reed Hastings said.
  • It also wants "none of the controversy around exploiting users with advertising," Hastings said.
  • Still, Netflix has been cozying up to brands in other ways, including more product placements, brand partnerships, and consumer products, as Business Insider has covered closely.
  • Visit Business Insider's homepage for more stories.

Netflix is beefing up its explanation for why it won't sell advertising, as a small contingent of Wall Street firms continue to push the company to consider new revenue streams.

Wall Street analysts, including those at Needham and Nomura, have argued that Netflix could boost subscriptions and revenue by introducing a plan that includes advertising.

Netflix has said it will not sell ads because doing so would damage its ad-free brand proposition.

CEO Reed Hastings added on Tuesday that building a meaningful advertising business would require challenging online-ad behemoths like Google, Facebook, and Amazon. Such a feat wouldn't come cheap.

"There's not easy money there," Hastings said during Netflix fourth-quarter earnings video. "They're integrating so much data from so many sources ... To keep up with those giants, you've got to spend very heavily on that and track locations and all kinds of other things that we're not interested in doing."

Hastings also pointed to the regulatory risks around ad targeting that have arisen as regions like the European Union and US state of California adopt new data-privacy laws, and US politicians push to break up big tech companies, in part, because of the immense user data they control.

"We want to be the safe respite where you can explore; you can get stimulated, have fun, enjoy, relax and have none of the controversy around exploiting users with advertising," Hastings said.

Nevertheless, other streaming services like Hulu have successfully built advertising businesses. And forthcoming platforms like NBCUniversal's Peacock and the mobile-video startup Quibi are forgoing Netflix's subscription-only model for a hybrid model that includes both subscriptions and advertising. Dual revenue streams have also historically been the bedrock of the television industry, allowing it to fund expensive programming.

Netflix has also been cozying up to brands in other ways, including more product placements, brand partnerships, and consumer products, as Business Insider has covered closely.

The streaming company is building out its consumer-products team that partners with companies like Ben & Jerry's and Nike on products that promote the Netflix brand. It's also co-marketing its originals with brands like Baskin-Robbins and Burger King to reach like-minded audiences that aren't yet on Netflix.

Below is a list of stories Business Insider has published that give a glimpse into Netflix's relationships with brands, and what it's competition is up to. The stories are organized by topic.

Have an idea for another story or a tip? Let me know at arodriguez@businessinsider.com. Email for Signal number.

The Netflix teams shaping its work with brands

Netflix and advertising

Netflix's partnership strategy

The competition

Exclusive FREE Slide Deck: 40 Big Tech Predictions for 2019 by Business Insider Intelligence

{{}}

Add Comment()
Comments ()
X
Sort By:
Be the first one to comment.
We have sent you a verification email. This comment will be published once verification is done.