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Netflix’s Best Advertising Bet Won’t Require Software

Photo: Photos by Bloomberg. Art by Mike Sullivan.

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Let’s start with a controversial take: Netflix won’t pivot to a Hulu- or YouTube-like ad-supported model. That is to say, it will find additional revenue in ads, but not with the type of highly sophisticated, precision-targeting software that Hulu and YouTube have.

Why? Because Hulu and YouTube have each taken more than 15 years to develop ad-targeting software that can operate at Netflix’s scale.

Other than Amazon and Roku, no one else seems close to catching up to them. But even so, every legacy media streamer that has moved (Paramount+, Peacock, HBO Max) or will move (Disney+) into ad-supported streaming possesses two key assets:

  1. An in-house ad sales team with long-standing advertiser relationships across both linear and digital formats (with the emphasis on linear), and
  2. Some form of in-house video ad-serving technology, either built through acquisition (NBCUniversal and Comcast’s FreeWheel, Disney and Hulu) or internally (HBO Max).

Netflix has neither.

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