Netflix isn't ready for live sports, Ted Sarandos says

Ted Sarandos, co-CEO and chief content officer of Netflix, offered few new details on Tuesday about the performance of the streamer’s ad-supported subscription tier, which launched in early November. Speaking at UBS’s Global TMT investor conference, he did, however, address rumors that Netflix is looking to acquire rights to live sports. “The economic models that are built around [live sports] are built around the economics of pay television, which are different than streaming,” said Sarandos. “We’re not anti-sports, we’re just pro-profits.” He added that Netflix “has not seen a profit path for renting big sports,” citing the high expenses of league rights. Sarandos also touched on Netflix’s early steps into video games, which he said would start with developing owned properties into games—“Stranger Things” and “Nailed It” were his examples—before developing original games to later develop into films and TV. He also suggested the streamer might implement a separate subscription model for video games: “Can we better monetize gaming through the subscription model the way that we did for TV and film?” he asked. Addressing Netflix’s ad tier, Sarandos recycled talking points that the product will grow at a “crawl, walk, run” pace. He added that Netflix is “not patting ourselves on the back too hard” over the new product, which he claimed was built from scratch in six months. “We just turned it on and it works,” Sarandos said, sidestepping any expectation for real metrics. Ad Age's Marketers of the Year The 10 marketers that broke through in 2022 See the full list here Sarandos admitted that Netflix “ignored the advertising market for too long” and that the company is now embracing the idea that consumers will pay Netflix in part “with attention versus a credit card.” He promised the future of the ad tier would hold better targeting options that would customize the experience for consumers—even down to the time of day the platform is being used—and that it will grow in importance to the company’s revenue over time. Sarandos also hinted that Netflix may launch additional ad-supported tiers: “We have multiple tiers today, so it’s likely there will be multiple ad tiers over time,” he said. Check out the latest Ad Age events and award programs Early pitches from Netflix generated controversy among media buyers for industry-high pricing and minimal ad-product offerings. But since launch, multiple media buyers have told Ad Age that Netflix has suffered from no glaring technical issues and only slight under-performance in audience. The buyers said the launch mostly aligned with expectations. “We are talking small dollars,” said one buyer. “We went into this knowing underdelivery early was a distinct possibility, so we negotiated flexibilities”—for instance, allowing buys to be shifted or held for when the platform has built appropriate scale. Another buyer explained that many advertisers sat out the launch because they “just wanted to see how this month went… It all hinges on if [Netflix’s] numbers come up or not. Because otherwise, they’re not going to even have anything to sell.” Netflix’s “Basic with Ads” subscription tier looks like many others—e.g., it includes pre- and mid-roll ad breaks—and costs $6.99 per month. In an October press briefing, Jeremi Gorman, president of worldwide advertising at Netflix, said the streamer had “nearly sold out” its inventory for launch, with “hundreds of advertisers worldwide participating.”

Netflix isn't ready for live sports, Ted Sarandos says

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