Trying to quickly start up a new TV ad sales operation, especially if you already are a big name dominant streaming TV operation, will be a chore. Just ask Netflix.
If this were a new cable network, the attention and leaked news about advertising sales hirings would hardly register a blip.
But this is Netflix. A very high profile entertainment company – now reportedly talking to another digital-first company Roku that also desires to expand its streaming business in all sorts of ways -- including advertising, programming and otherwise.
Additionally, Netflix has been talking to Comcast about advertising sales support.
The former makes some sense. But Comcast? Doesn’t it have this competitive streaming operation called Peacock? Is this strange bedfellows, or, just some “frenemy” mode of thinking?
Just like its wannabe competitors, Netflix is looking to make all new streaming permutations quickly. Its goal is to start an ad sales operation by year’s end.
One big issue: Programming rights. Netflix’s deals for making or acquiring programming/movies reportedly doesn't include the provision of selling ads in or around them.
Financial dynamics could change drastically, raising licensing fees for the big subscription video on demand service by a big 20%, according to one story. (Whoa!) Netflix already spends close to $18 billion a year acquired programming and producing original content.
Netflix needs to hit the ground running, thus in need of a fully operational ad sales organization with experience. Still, streaming advertising revenue could be weak to start if Netflix takes a slower, in-house approach.
MoffettNathanson Research estimates only $150 million in Netflix’s first year from ad revenue, rising quickly to $1.5 billion by 2024.
If the fast-moving Netflix race car program/production spending continues down the road, how will nearly $4 billion in new program expenses ding things? For sure stranger things to come.