--- title: Should Netflix sell ads? - The Hustle description: Why some analysts believe Netflix may need to un-differentiate itself. image: https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/1046451621-HS-News-Brief_2022-04-05T234657.031Z.webp --- # Should Netflix sell ads? ![Rob Litterst](https://thehustle.co/wp-content/uploads/2023/01/Rob-Litterst-pic.png?width=48&height=48&name=Rob-Litterst-pic.png) [Rob Litterst](https://hs-sbup.thehustle.co/author/rob-litterst) [Rob Litterst Twitter profile ](https://twitter.com/robbylit) Published: April 06, 2022 Updated: October 11, 2023 Raise your hand if you subscribed to Netflix for DVD rentals. Anyone? ![Should Netflix sell ads?](https://hs-sbup.thehustle.co/hs-fs/hubfs/The%20Hustle%20News/Assets/Images/1046451621-HS-News-Brief_2022-04-05T234657.031Z.webp?width=595&height=400&name=1046451621-HS-News-Brief_2022-04-05T234657.031Z.webp) Netflix’s infamous subscription model differentiated it from Blockbuster — may it rest in peace — and the company’s leap of faith to streaming differentiated it among media firms. Now, amid slowing growth and ruthless competition, [analysts believe](https://stratechery.com/2022/why-netflix-should-sell-ads/) Netflix may need to *un*-differentiate itself, and that a world with ads on Netflix might make sense. #### **Let’s step back** Netflix’s historically massive YoY subscriber growth has slowed, and hasn’t eclipsed the 20% mark since Q4 2020. Why? Per [*Stratechery*](https://stratechery.com/2022/why-netflix-should-sell-ads/): - The pandemic pulled growth forward and Netflix neared North American market saturation (75m subs among 132m households). - Over the same time, competition heated up across Disney+, HBO Max, Paramount+, Amazon Prime Video, and Peacock. Despite this, Netflix has a strong business. “We were about a **$20B** revenue business 2 years ago… we’re** $30B** revenue now,” the company’s CFO, Spencer Neumann, [said](https://techcrunch.com/2022/03/10/netflix-says-an-ad-supported-tier-still-isnt-in-its-plans-despite-the-disney-announcement/) last month. #### **So why the need for ads?** True, there are other ways Netflix can grow revenue, including: - **Raising prices**, which the company has [regularly](https://thehustle.co/01182022-netflix-price/) done over time. - **Gaming**, which Netflix has prioritized, [buying](https://www.hollywoodreporter.com/business/digital/netflix-game-studio-buying-spree-lays-groundwork-for-next-streaming-battle-1235121990/) 3 gaming studios in the last 7 months. - **Password policing**, which the company [tested](https://about.netflix.com/en/news/paying-to-share-netflix-outside-your-household), and could yield [**$1.6B**](https://variety.com/2022/digital/news/netflix-charge-fee-password-sharing-revenue-1235212426/) annually. But these options have downsides. Raising prices can drive churn, it’s unclear if Netflix and gaming are a fit, and password policing will piss off half of America. #### **Or, there are ads…** … which Netflix is not *entirely* opposed to. “It’s not like we have religion against advertising,” Neumann [said](https://www.businessinsider.com/netflix-cheaper-subscription-ads-revenue-content-licensing-growth-2022-4) recently. Many other streaming services offer ad-supported plans at lower price points, and they’re growing fast. Analysts have also said that an adless Netflix is missing out on **$9B** in potential revenue. An ad-supported Netflix tier would offer price-sensitive subscribers a low-cost alternative, and if done right, the user experience wouldn’t take much of a hit. Take TikTok, for example, where ads themselves are TikToks, and sometimes go viral as a result. Of course, hiring and building for an ad network would be a big shift — but Netflix is no stranger to pivots. Remember, once upon a time the company mailed out DVDs. 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