The joint CEO and chairman of Netflix, Reed Hastings, has revealed that he wishes that the streaming service introduced an ad-supported payment plan years ago, as they are now facing a changing market and falling subscriptions.
Speaking earlier this week at the New York Times’ DealBook Summit in New York, Hastings said that the company’s reluctance to adopt advertising was “wrong” and that they should have done it years ago. However, he did say that the rollout of Netflix with advertising this autumn is a “good tactic, because we get to offer consumers lower prices.”
“I have two religions: customer satisfaction and operating income,” Hastings said in a very David Brent fashion. “Everything else is a tactic,” he added.
“You’re right to say I didn’t believe in the ad-supported tactic for us. And I was wrong about that.” Hastings responded to a question. He then credited Hulu and former CEO Jason Kilar with proving that success can be found in advertising on streaming sites. “Hulu really proved that you could do that at scale and offer consumers lower prices, and that that was a better model.”
Hastings added, “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.”
Netflix launched a basic deal with ads in the United States in early November, at $6.99 per month, with the regular no-ad plan at $9.99. The advertisement-including package also excludes a range of popular series and films, as the company does not currently have the rights to advertise for them. It is available in 12 countries, including Australia, Brazil, Canada, South Korea and the UK.
For the fourth quarter, Netflix isn’t expecting the ad-supported service to provide a “material” contribution to their income, but in the longer term they are “very optimistic about our new advertising business.”
Hastings then turned his attention to the limited theatrical release of Glass Onion, the hotly anticipated sequel to Rian Johnson’s mystery Knives Out. He explained that it was a “promotional tactic” used to create a buzz and drive up subscriptions, with Netflix considering doing similar in the future. “We are not trying to build a theatrical business,” he said. “We are trying to break through the noise.”