Netflix Executives Use Privacy Issues To Praise Ad-Free Model

Netflix executives love advertising -- as long as they're the ones doing the buying. That was one takeaway from the company’s Q1 2018 earnings call, where CEO Reed Hastings, CFO David Wells and chief content officer Ted Sarandos laid out some of their thinking for the next year.

Netflix plans to continue increasing its marketing spend, both in the U.S. and around the world, making it one of the largest advertisers in the media and technology space.

“We have definitely leaned more into marketing.... As we create more and more of these titles that no one has heard of, we're going to need to lean a little bit more on promotion, and the website can't do it all,” Wells said on the call.

While Netflix remains a big spender on advertising, the service remains ad-free (aside from some brand integrations on some shows). 

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Asked about Facebook’s recent privacy troubles, and the new GDPR regulation set to take effect in Europe May 25, executives reiterated that advertising simply isn’t on their radar at the moment.

“I'm very glad that we built the business not to be ad-supported, but to be subscription,” Hastings said. “We're very different from the ad-supported businesses, and we've always been very big on protecting all of our members' viewing. We don't sell advertising. So I think we're substantially inoculated from the other issues that are happening in the industry, and that's great.”

Hastings also made a revealing comment about where he sees the company. While Netflix is viewed as one of the four “FANG” tech stocks, alongside Facebook, Amazon and Google, Hastings says he does not really count those companies as competition.

“[This year] we’ll spend over $10 billion on content and marketing and $1.3 billion on tech. So just objectively, we're much more of a media company in that way than pure tech,” he said. “Now of course, we want to be great at both, but again, we're really pretty different from the pure tech companies.”

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