Skip to Content

Netflix CFO Says Company Open to Ad-Supported Tiers, but ‘Doesn’t Make Sense’ Now

Matt Tamanini

On Tuesday, Netflix Chief Financial Officer Spencer Neumann said that the streaming giant is not unilaterally opposed to the idea of introducing an ad-supported option to provide customers with a lower-priced entry point to the service, but that it is not likely to happen any time soon. “It’s not like we have religion against advertising to be clear,” Neumann said. “But for now it doesn’t make sense for us.”

Speaking at Morgan Stanley’s Technology, Media, and Telecom Conference on Tuesday, the CFO said that seeing competitors like Disney+ announce the addition of lower-cost, ad-supported tiers is “hard for us to kind of ignore.”

However, Neumann said that the company is not heading in that direction in the immediate future. Although speculation around Netflix adding a cheaper option has been around nearly as long as the service has, Neumann reiterated that they are currently focused on other ways to grow their business.

“We said what we’re focused [on] is on building, optimizing for long-term revenue, big profit pools,” Neumann said. “And we want to do it in a way that is a great experience for our members … so we lean into consumer experience, consumer choice, and what’s great for our creators and storytellers.”

Since the company pivoted from DVDs to streaming, part of that focus on consumer experience has always been to provide a premium, ad-free environment for viewing, and that is likely going to remain the case for the foreseeable future. Neumann said that Netflix believes in its subscription model and points to the continued growth of the business — especially internationally — as proof that they do not need to turn to advertising to keep increasing revenue.

The CFO noted that over the last two years, Netflix has gone from having $20 billion in revenue to $30 billion thanks to continued penetration into overseas markets. In the fourth quarter of 2021, Netflix added 8.28 million subscribers bringing their total up to 221.84 million worldwide. That number is up 16% year-over-year; the company reported roughly 203 million subscribers at the end of 2020.

However, Netflix added just 1.19 million new accounts in the U.S. and Canada during Q4 2021 but saw most of its growth come internationally with 3.54 million added in Europe, the Middle East, and Africa and 2.58 million in the Asia-Pacific region of the world. Latin America also added just under 1 million new accounts as well.

Neumann reiterated that the company is not fundamentally against the idea of incorporating advertising, but that they would likely allow other streamers to explore, and learn from, those options for a while before they took the step. “Never say never, but it’s not in our plan, but other folks are learning from it,” he said.

Earlier this year, Netflix raised its prices for all new U.S. subscribers. The standard plan increased to $15.49 per month, while the streamer’s 4K plan is now up to $20/month. The service also raised its rate on its basic plan to $9.99. Existing subscribers will eventually see their rates rise to those prices as well.

Netflix

Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.

Netflix offers three plans — on 1 device in SD with their “Basic” ($9.99) plan, on 2 devices in HD with their “Standard” ($15.49) plan, and 4 devices in up to 4K on their “Premium” ($19.99) plan.

Netflix spends more money on content than any other streaming service meaning that you get more value for the monthly fee.

DIRECTV STREAM Cash Back

Let us know your e-mail address to send your $50 Amazon Gift Card when you sign up for DIRECTV STREAM.

You will receive it ~2 weeks after you complete your first month of service.

Sling TV Cash Back

Let us know your e-mail address to send your $25 Uber Eats Gift Card when you sign up for Sling TV.

You will receive it ~2 weeks after you complete your first month of service.

Hulu Live TV Cash Back

Let us know your e-mail address to send your $35 Amazon Gift Card when you sign up for Hulu Live TV.

You will receive it ~2 weeks after you complete your first month of service.