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Netflix Co-Founder: ‘I Was Wrong’ to Delay Ad-Supported Streaming; Live Sports to Only Come Eventually

David Satin

Netflix co-founder and co-CEO Reed Hastings spoke at the New York Times’ DealBook summit on Nov. 30 and made more than a few headlines with some of his comments. In a wide-ranging conversation in which the executive was not afraid to dive into more controversial topics, Hastings spoke about the company’s recent launch of an ad-supported tier, and his long resistance to ad-supported streaming.

“You’re right to say I didn’t believe in the ad-supported tactic for us,” he said according to reporting from Media Play News. “And I was wrong about that.”

Hastings credited Hulu with showing him the light as to the wisdom of ad-supported streaming. Hulu launched in 2007 with both an ad-supported and an ad-free tier, and has since grown to 47.2 million global subscribers. Hastings noted that the much-coveted 18-49 year old demographic has been transitioning away from linear TV toward connected televisions (CTVs) and smart TVs, and advertisers have been in hot pursuit. As advertising dollars shifted to streaming platforms on smart TVs and CTVs, Netflix allowed its competitors to get a leg up in chasing the new revenue.

“We didn’t have to steal away the advertising revenue; in fact, it was pouring into connected TV,” he said. “And I wish we had flipped a few years earlier on it, but we’ll catch up, and in a couple of years we won’t remember when we started it.”

Due to Netflix’s hesitance to get into the ad-supported game, it did not have the infrastructure to begin airing commercials with programs as quickly as it had liked. So, it partnered with Microsoftin order to expedite its entrance into the ad-supported video-on-demand space.

Hastings may be adopting a “better late than never” attitude regarding the company’s reluctance to introduce an ad-supported tier, but industry analysts are bullish on the move. Some estimates suggest that the company could see an additional $600 million in revenue from the plans with ads in the first year alone, and by 2027 Netflix could be garnering supplemental revenue to the tune of $5.5 billion thanks to the new plan.

There was a myriad of topics covered by Hastings in the wide-ranging conversation, according to Deadline. He also spoke about Netflix’s planned $17 billion content spend in 2023, a forecast he said was unchanged.

Hastings also provided some insight into whether the company is looking toward a meaningful investment in live sports. He stated flatly that the company would consider such a move only when its investment in mobile games starts to pay off. Netflix has certainly been pouring resources into its mobile games division, and recently launched a sixth in-house gaming studio.

Netflix was reportedly interested in acquiring the streaming rights to Formula 1 Racing earlier this year, but lost out to ESPN. It seems that was the last major effort to get into live sports from the company for the foreseeable future.

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 four plans — on 1 device in SD with their “Basic with Ads” (US$ 6.99) plan, on 1 device in SD with their “Basic” (US$ 9.99) plan, on 2 devices in HD with their “Standard” (US$ 15.49) plan, and 4 devices in up to 4K on their “Premium” (US$ 19.99) plan.

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

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