It’s a no-brainer for Netflix to add an advertising tier, but Reed and Ted seem hell-bent to launch it before the end of this year. Why so damn fast? Are they really that desperate?
In a word: Yes. Co-C.E.O. Reed Hastings basically admitted the end-of-year 2022 goal puts Netflix on a crazy timeline, telling employees in a recent note that “it’s fast and ambitious and it will require some trade-offs.” Most analysts think the ad tier will launch only in selected foreign markets at first, but given the company’s deflated stock price and subscriber plateau, plus the competitive ad tiers at other streamers, Hastings clearly feels the situation is urgent. People I talk to in and around Netflix say this ad urgency is tied to the coming crackdown on password-sharing. Netflix could no longer ignore the free-riding, but the leadership has no idea how the policing will play with customers, and how many freebies can be converted to upcharges or separate memberships. So Netflix really wants to have that lower-priced, ad-driven tier ready to go as a lure to keep those cash-strapped college kids and cheap-ass ex-boyfriends in the Netflix family.
One other note on Netflix ads: Is Hastings really going to let the Google fox into his henhouse? Netflix is reportedly deciding whether to initially outsource its ad business to either Google or Comcast. If Hastings can’t see why it might be problematic to turn his platform over to perhaps the tech industry’s biggest, most ruthless and data-mining competitor, he deserves whatever happens.