With just over 180 days to make good on its pledge to launch a lower-priced ad-supported tier by the end of 2022, Netflix is taking meetings and moving fast.
This week, wild rumors about possible M&A with Roku turned into speculation about a partnership, with The Information reporting that Netflix executives met with Roku operatives to discuss how they might assist them in integrating and selling advertising within Netflix shows. (Netflix execs reportedly had similar meetings with Comcast.)
Netflix responded that it's still "early days" in terms of hoisting its ad-supported model, it hasn't made any actual decisions yet, and any reporting we see is "just speculation at this point."
Some of that speculation is illuminating, however.
Take for instance this notable tidbit from The Information report: Netflix will have to pay as much as 20% more in its program licensing deals to acquire the rights to integrate advertising. The pub adds that Netflix currently lacks the rights to put ads in most of its content.
So we're talking about a substantial ramp-up cost figure, especially when you consider that Netflix is projected to spend around $18 billion this year on producing and licensing TV shows and movies.
Meanwhile, the crush of analysts and executives chiming into the speculative discourse surrounding a possible Netflix-Roku tie-up is kind of unprecedented -- Next TV gets five or more emails a day soliciting packaged executive quotes on the topic.
However, some of what we're seeing is interesting:
> Evan Shapiro, the former IFC/Sundance and National Lampoon president turned Fordham professor and TMT pundit, remarked on LinkedIn Wednesday: -- "In playing for the next quarterly earnings report, Netflix seems to be contemplating unraveling the CORE parts of their model that made them disruptive -- control of access to their consumers; control of their data; methodical audience-building."
> Dallas Lawrence, who left his corporate communications job at Roku in January for a SVP-level corp comms gig at Samba TV: "For a number of reasons -- from declining subscriber growth to a very real opportunity to capture significant political ad sales revenue if they can be live in the next few months, Netflix is racing to launch an ad model. Building an ad business from scratch isn't easy, and Roku has a large and seasoned ad sales team. By collaborating closely, or outright acquiring Roku, Netflix would have access to a massive ad sales team that would let them rapidly connect with brands and agencies on a global level."
> Rich Greenfield has fully recovered from a serious and rather mean-spirited takedown attempt by media writer Michael Wolff six years ago. The LightShed Partners principal is perhaps the most quoted of the celebrity equity analysts. He had this to tweet about The Information report:
