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- Netflix just took a swipe at Amazon as the ecommerce giant prepares to launch its ad-supported tier.
- Netflix is the dominant streamer by subscribers, but its ad business has a long way to go.
- Co-CEO Greg Peters said unlike Amazon, where ads will be the default, Netflix didn't 'force' people to see ads.
Netflix just took a swipe at Amazon as the ecommerce giant prepares to launch ads in Prime Video starting next week, taking on Netflix for advertising dollars.
Netflix is the dominant streamer, with 260 million subscribers worldwide, but when it comes to advertising, it's got a long way to go to catch up with rivals like Disney that have been selling video ads longer.
Now, Netflix is about to face a heavy-hitting new competitor for ad dollars in Amazon, which will launch ads on Prime Video starting January 29. The ecommerce giant will offer much more scale than Netflix from the get-go because it's making ads the default for 115 million monthly users. Netflix's ad tier has shown strong recent growth but still boasts only 23 million users globally.
Amazon also has other compelling ad products it can tie in, like NFL's "Thursday Night Football" and its core commerce ads.
Netflix co-CEO Greg Peters fielded an analyst question during the company's fourth-quarter earnings call today about how the streamer will be positioning itself against Amazon — and whether Netflix had considered making ads the default option, as Prime Video is doing.
"We did consider making it the default option, but given our long history of not having ads, we thought it was better for our members — rather than force them into a change and give them ads — better to attract them to the ads plan for the ones that wanted it, with the benefits," Peters said. (Among those benefits is the significant price difference: Netflix's ad tier costs $7 per month, less than half the ad-free version.)
Netflix said in its earnings report that 40% of its signups now are for the ad tier in the markets where it's available. And according to Peters, there hasn't been significant backlash to its strategy.
Netflix has stayed way ahead in the streaming race by making a huge quantity of shows and movies people can't get enough of. It's no industry secret that Amazon has struggled to establish a brand identity and produce consistent hits. Peters didn't have to make an explicit comparison with Prime Video to make the point.
"We've got the most engaged audience, watching the most culture-defining films, series, and live events," he said. "That is an important place for brands to be, and that's what differentiates us from our competitors."