Netflix CFO Spencer Neumann said the company has no plans yet to launch low-cost subscriptions with advertising.
After The Walt Disney Company confirmed the subscription with additional commercial showings on the Disney+ channel, many expected Netflix to follow suit. Typically, such a subscription is cheaper, but viewers have to spend time viewing ads, and the experience of such viewing is noticeably worse. Therefore, according to Neumann, such tactics may work in the short term, but hurt the company in the long term.
“We believe we have a good subscription business model that scales very well globally. Two years ago our revenue was about $20 billion and now we have reached $30 billion. We see healthy growth in all regions of the world.”said Neuman.
The Netflix tariffs are now heavily dependent on the number of devices and the quality of the content. Budget plans are available for fast-growing markets like India: For just $2 a month, you can access the entire catalog, but video quality is limited to 480p and access is limited to one device. In other regions, prices are much higher and conditions may vary. The company fears that advertising may negatively impact user experience.
Although the company has no plans to introduce advertising in subscriptions yet, Spencer Neiman noted that it is difficult for businesses to ignore the fact that other websites offer similar options. However, it is emphasized that such options do not make sense at the moment. At the same time, Neiman can’t help but consider that there are many competing services, including Hulu, Amazon Prime Video, HBO, Paramount NBC, Peacock, and others, and some of them have “promotional” plans in their listings. So Netflix isn’t giving up on the idea forever.
At the moment, the site is looking for other ways to increase the profitability of its business, including exploring opportunities to enter the gambling market. Although the company has a very weak presence here, with its resources it is quite possible to expand if necessary.