Netflix CEO says the streaming service's decision to be ad-free isn't 'a philosophical thing' — it's simply 'the best capitalism'

  • Netflix CEO Reed Hastings said in a new interview that the reason the streaming giant doesn't have commercials isn't because of a philosophical stance, it's because it's the "best capitalism."
  • Making money from ads is hard to do, the CEO said, and highly competitive.
  • Hastings said Netflix isn't considering live TV add-ons like Hulu either, as "every content dollar is spoken for."
  • Visit Business Insider's homepage for more stories.

Netflix CEO Reed Hastings revealed more about the streaming giant's thoughts on advertising and commercials in a recent interview with Variety, explaining that "it's basically what we think is the best capitalism, as opposed to a philosophical thing."

Hastings, who has been giving interviews recently to promote his new book, "No Rules Rules: Netflix and the Culture of Reinvention," added that it's all part of the "No Rules Rule" approach he takes toward running the company.

"It's a judgment call… It's a belief we can build a better business, a more valuable business [without ads]," said Hastings. "Advertising looks easy until you get in it." He added that sometimes competing for advertising doesn't work the way that a business might expect, and with the ad market facing headwinds, a company has to "rip that revenue away from other places." 

Hastings has previously said that there's no "easy money" in the advertising industry, and competing with ad giants like Google, Facebook, and Amazon would be "quite challenging."

Hastings said that focusing on subscriptions has worked for the company for such a long time, noting Netflix "went public 20 years ago at about a dollar a share, and now we're [more than] $500." And while other streaming giants offer free or less expensive subscription plans that are ad-supported, Netflix so far has been content to simply raise its prices every few years as it builds out its vault of originals.

In recent weeks, Netflix has begun to dabble in free marketing-related offerings. While not an actual free subscription, it now allows non-subscribers to watch the first episode of some of its original series and some full-length movies as a way to encourage them to subscribe.

Hulu, a major competitor, launched live TV add-ons in recent years as a way to diversify content and bring in new revenue. When asked if Netflix would follow suit, Hastings said that for now, "every content dollar is spoken for," as Ted Sarandos, co-CEO and Chief Content Officer is focusing on "bigger movies, bigger series, [and] animation of course." 

Other topics in the interview included filming during the coronavirus pandemic, competitors in the streaming market, and decisions the CEO regrets. You can read the entire Variety interview here.

Business Insider Global Editor-in-Chief Nicholas Carlson also recently interviewed Hastings for his "Starting Up" podcast, which you can listen to here.

Disclosure: Mathias Döpfner, CEO of Business Insider’s parent company, Axel Springer, is a Netflix board member.

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