Netflix Doesn't Make a $14 Billion Mistake

  Netflix Doesn't Make a $14 Billion Mistake A veteran analyst calls Netflix because it's not making money on the connected-TV advertising spree.   Few Wall Street pros get streaming media better than Needham's Laura Martin. In the past, she was a believer in Roku (NASDAQ: ROKU) and then fuboTV (NYSE: FUBO). That's why she criticized the situation after Netflix announced that it was refusing to run ads. According to Needham, she finds it wrong that Netflix NFLX (NASDAQ) $534,05 +0,55 (+%0,10) doesn't add ads like its competitors. At a time when the connected TV ad market is growing rapidly, she laments Netflix focusing on the subscriber experience rather than growing revenue, and losing money because of it.

Unconventional Rules

Ad revenue is an important part of the business model for most streaming platforms. In fact, Netflix has become the default streaming service in over 200 million homes worldwide, as marketers place emphasis and value on viewer experiences and what they want, rather than what they want. In addition, if Roku and Fubo TV gave importance to advertising revenues like its competitors, it would be discussed whether it would be where it is today. It is true that ad revenues are substantial for Ruko and FuboTV. Netflix rejected $14 billion in ad revenue last year, a price that will increase their account by 56% in 2020. NFLX has managed five price increases (from $7.99 to $13.99 per month) over the past seven years, as its subscribers enjoy the new experience rather than ad revenue. Netflix hasn't become the leader among streaming service stocks, following everyone else.  

Source: The Motley Fool

 

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