Netflix Inc (NASDAQ: NFLX) CFO Spencer Neumann says that while the company isn’t necessarily opposed to advertising, any consideration of pursuing an ad-supported model is “not something that’s in our plans.”
What Happened: Speaking at the Morgan Stanley Technology, Media, and Telecom Conference last week, Neumann said Netflix is focused on “optimizing for long-term revenue…and we want to do it in a way that is a great experience for our members.”
“Right now, we think we have a great model and a subscription business that scales globally really well,” the Netflix CFO said. “We were about a $20 billion revenue business two years ago…we’re $30 billion revenue now. The growth is healthy across every region of the world.”
Why It Matters: Questions about the streaming giant offering an ad-supported tier follow Walt Disney Co’s (NYSE: DIS) announcement that its streaming platform Disney+ would begin offering an ad-supported subscription option later this year. The streaming service’s current ad-free plan costs $7.99 per month.
Hulu, which is owned and operated by Disney, offers an ad-supported tier for $6.99 per month.
Netflix is facing pressure to increase subscribers after just missing Wall Street estimates for subscriber growth in its Q4 2021 earnings. The company said it anticipates the number of subscribers to increase with launches of some of its more anticipated shows, like the second season of the popular “Bridgerton.”
But, Netflix also admitted in its shareholder letter that increasing competition from rival streaming platforms “may be affecting our marginal growth.”
Netflix shares closed down by 4.61% on Friday to $340.32.
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