Netflix Is Scrambling to Learn the Ad Business It Long Disdained

Author: Editors Desk Source: WSJ:

August 3, 2022 at 13:22

‘Squid Game’ was a breakaway hit for Netflix. ROBYN BECK/AGENCE FRANCE-PRESSE/GETTY IMAGES

Reed Hastings insisted on focusing on subscriptions until competitors started nibbling away at his business model

For years, Netflix Inc. NFLX 2.54%▲ boss Reed Hastings was emphatic that the streaming giant wouldn’t show ads in its programming. Late last year, the company did a 180. Netflix didn’t just want to enter the ad business—it wanted to do so in a hurry.

The company assembled engineers to sound them out on the technical challenges. Executives quickly decided they would initially need an external partner to supply technology and sales power.

By spring, after announcing its plans publicly, Netflix had fostered a bidding war that included Alphabet Inc.’s Google, Comcast Corp.’s NBCUniversal and a dark horse, Microsoft Corp. One of Netflix’s goals was to secure a big “minimum guarantee”—a promise that it would get a large influx of ad revenue to limit its financial risk, say people familiar with the discussions.

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