July 5, 2022

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Netflix Co-CEO Says Its Seeking Ads Partnerships, Not a Roku Takeover

Netflix’s co-CEO Ted Sarandos said the streaming giants is holding talks with multiple advertising companies about partnerships that would help it introduce a cheaper membership with ads, according to reports. 

“We’re talking to all of them right now,” Sarandos said Thursday, according to Reuters, when he was asked on a panel about the advertising companies it’s pursuing for potential partnerships. Sarandos’ panel was part of the Cannes Lions advertising summit in France, one of the world’s biggest annual events for the ad industry. 

The comments, and Netflix’s attendance at Cannes Lions for the first time, further cemented Netflix’s public commitment to introducing advertising to its service. In April, when Netflix reported its first subscriber loss in a decade, co-CEO Reed Hastings reversed years of dismissing any interest in advertising by revealing the company was “looking at” a cheaper, ad-supported tier for Netflix. 

But Netflix, which doesn’t have an ad-sales force, would need to hire people and create its own, acquire an entity to absorb an ad-sales team or technology, or forge a partnership with an existing ad company. 

Thursday, Sarandos comments indicated the company is pursuing the latter. 

Sarandos also batted down the idea that Netflix is seeking to take over Roku, a company that has built a growing business around its own streaming service people can watch free with advertising, called The Roku Channel. “I don’t know where that came from,” Sarandos said of the speculation it might purchase Roku, according to Deadline. But he left the door open to ownership of its own advertising business down the road. “If it becomes so important [that] we want to have control over it, we might,” he said, according to Deadline. 

The drop in viewers has buffeted Hollywood’s confidence in streaming as its engine into television’s future. Netflix’s years of unflagging growth pushed nearly all of Hollywood’s major media companies to pour billions of dollars into their own streaming operations. These so-called streaming wars brought about a wave of new services, including Apple TV PlusDisney PlusHBO MaxPeacock and Paramount Plus, among others, a trend that’s complicated how many services you must use — and pay for — to watch your favorite shows and movies online. 

With the intensifying competition to hold your attention and your subscription dollars, most of Netflix rivals have leaned into a two-tier model, which offers a cheaper membership to watch with advertising as well as a more expensive subscription without ads. Netflix blazed the trail for streaming TV, but its ad-free-only strategy has fallen behind the standards of the industry, as competitors launched giving viewers like you more options.