Todd Spangler NY Digital Editor Just over three years ago, Netflix unequivocally shot down the idea that it would ever roll out an ad-supported streaming service. “When you read speculation that we are moving into selling advertising, be confident that this is false,” the streamer said in its second-quarter 2019 investor letter. “We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.” Clearly, Netflix’s thinking about advertising has changed.
Both Netflix and Disney+ are launching ad-based tiers this fall, seeking to broaden their addressable markets and tap into a new revenue stream as subscriber growth has slowed — in Netflix’s case, it lost 1.2 million in the first half of 2022, compared with a net gain of 5.5 million in the prior-year period.
The move to let “consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense,” Netflix chief Reed Hastings told investors in April in explaining his about-face.
The ad industry has cheered the moves by the two streamers. “It’s going to be the most new inventory for TV content ever introduced at one time,” says Ashwin Navin, CEO of Samba TV, a television and streaming viewing measurement firm. “These companies collectively represent a massive amount of premium video that until now has been off the market [for advertisers].
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