Netflix Monetization

During their quarterly earnings release yesterday, Netflix (NFLX:NASDAQ) disappointed the investment community by adding 2.7 million paid subscribers. The analyst community was looking for $5 million additions.

On the call, management was fairly clear that they are not looking to add any element of advertising to their platform. With 150 million subscribers worldwide, it would seem to be a fairly large opportunity that they are passing on. Roku (ROKU:NASDAQ), a content aggregator and set top box distributor, has recently begun advertising on their devices with great results.

Netflix has the ability to target ads to demonstrated user interests, as well, given their treasure trove of information that comes from your viewing history. For example, the company also reported that 18 million people watched the entire season of Stranger Things within 4 days of it being released. I don’t think that an ad between shows would affect the viewing experience of the 18 million.

The streaming media is and always has been dominated by content. With new entrants coming along such as Disney (DIS:NYSE), the pressure to create top notch original content will only deepen. Money buys talent and talent creates and produces content. Netflix would seem to benefit from lining their coffer through every medium.

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