Netflix and Ads -- Green is So Smart

Jeff Green is very optimistic but he’s not the rah rah, put on a show optimistic. When he talks, I believe he comes from a place of research, experience, and humility.

He’s been saying NFLX will have to move to an ad-funded model for a while now and it looks like others are catching on.

Also, AMZN and GOOGL have had noticeable lower ad revenue. I think they’re moving away from these models because they have to in order to avoid regulatory scrutiny.

All seem to be good signs for TTD but it’s my largest position so who can help me avoid confirmation bias?

"Netflix has said it doesn’t want to run ads, but industry experts say Monday that it might have to if it wants to grow.

Ad executives from YouTube and JPMorgan Chase imply during a panel at IAB’s Digital Content NewFronts that Netflix would have no choice but to start displaying ads and that Netflix is recruiting people to help grow the business.

Several other streaming services such as Hulu offer both ad-free and ad-supported versions of their services."…


A bit OT… I just dumped my lost shares of NFLX. Been a long, long-term holding for me and I’ve very emotionally invested in the company. I bought part of my current home by selling NFLX share five years ago.

But time to move on… Maybe I should put that cash in TTD. I love that company already, a top three holding.

Here’s a use case, not a financial or technical analysis:

A couple months ago we’re at the mall, my wife’s choice not mine. She loves shopping for new hand bags. She picks one out, walks around a bit with the bag on her beautiful shoulder, decides to pass. Later, at home that evening, her phone serves an ad. Not for the store, not for the brand, FOR THAT EXACT BAG.

Digital ads based on buyer preferences, regardless of platform. Buy.


Netflix has said it doesn’t want to run ads, but industry experts say Monday that it might have to if it wants to grow.

I have been an investor in Netflix since 2003. This has been discussed often and in depth on the Netflix board for the MF premium services. Hastings has repeatedly said they will not use ads in the US. I believe him, and I agree with him. The subscription price in the US is low enough that it is not keeping many from being subscribers (there may be a few). No ads puts Netflix into a unique category which it dominates. Even Amazon couldn’t dent that.

In very low income countries, I think it is likely that Netflix will explore a “free with ads” tier. But they will also likely try lower quality video for less, particularly for mobile devices.



I have long been of the thought that Netflix may eventually need to add an ad-supported tier.

For one quick thought related to the question, to remain as a subscription-only success story, Netflix will have to have some outstanding content that folks HAVE to watch.

2 primary instances of HAVING to watch were on prominent display for me Sunday, as that was both the day that I saw the new Avengers (DIS) movie and the day that many folks watched the new episode of Game of Thrones (HBO). Both were discussed substantially on Twitter. I even incited someone complaining about spoilers because I shared a tiny detail about the specific beverage being consumed by a character, as it is one of my favorite instances of that family of beverage and is only regionally-available.

If Netflix can’t have enough must-watch programming, their ongoing cash burning/high debt business will start to become increasingly discussed. Stranger Things is the most prominent recent “must-watch” Netflix show, but I can’t instantly think of any others from the last 3 years.

no NFLX position