Netflix CEO Reed Hastingssaid the other day that despite ongoing speculation and investor pressure, they refuse to adopt an ad-based business model to boost Netflix’s revenue.
Hastings says technology companies like Google, Facebook and Amazon are strong in online advertising because they’re integrating data from many sources. He adds that he thinks the three companies will get most of their online advertising business. Reed Hastings says it is difficult for Netflix to turn into a $5-10 billion advertising business, and it is not advertising that will bring profitability to the company.
The fact that Netflix will continue to serve without advertising is particularly good news for the user. But it’s too early to tell if the platform will always go on like this. Netflix’s failure to deliver targeted ads, however, also allows the platform to avoid problems with personal data protection. Because it is possible to see why Netflix doesn’t need advertising by looking at the fourth quarter results. Netflix released an revenue report for the fourth quarter on Tuesday, noting that its revenue exceeded analyst estimates. The company said revenue of $1.30 per share was $5.47 billion. Also over the years, Netflix shares rose 4.58 percent.
Netflix’s revenues have increased, but the number of paid users has dropped by 27 per cent year-on-year. The platform closed 2019 with 167.09 million paid members. Netflix has doubled its subscribers in Asia-Pacific, Europe, Middle East and Africa (EMEA) countries.
At this point, however, the issue of competition should also be addressed. Last year, Apple launched Apple TV+ and Disney Plus in the streaming field. HBO’s digital publishing platform, HBO Max, is expected to be activated next May. With the opening of these platforms, netflix’s revenue and number of users will certainly decrease, especially in the US. The question is how this will affect the platform and the user experience.