Ted Sarandos talks Netflix future at Cannes Lions – The Hollywood Reporter

It’s official: Ads are coming to Netflix.

Netflix Co-CEO Ted Sarandos confirmed that the future of the streaming giant will include advertising and explained the about-face in a speech at the Cannes Lions advertising festival on Thursday. Netflix has long been reluctant to advertise on its subscription service, but after releasing disappointing numbers last quarter showing it had lost 200,000 subscribers, the company said it would introduce a less expensive ad-supported tier to its service, to attract new customers.

“We left a large segment of customers off the table, which is people who say, ‘Hey, Netflix is ​​too expensive for me and I don’t mind advertising,'” Sarandos said on Thursday at the Cannes Lions Vary Podcast host Kara Swisher. “We’re adding an ad tier; we don’t add ads to Netflix as you know it today. We’re adding an ad layer for people to say, ‘Hey, I want a lower price and I’ll watch ads.’”

Netflix’s presence at Cannes Lions — this is the streamer’s first time attending the global advertising conference — is a clear sign that the company is looking to win over the advertising industry. Sarandos confirmed that the company is in talks with potential ad sales partners. Sarandos is also honored this year with the Cannes Lions’ Entertainment Person of the Year award.

It remains to be seen if a new tier of advertising will be the solution to Netflix’s growth woes. With the company’s share price plummeting, speculation has mounted that the streamer could be the target of a takeover.

Sarandos acknowledged that a buyout “is always a reality, so we have to keep our eyes wide open on that one,” but insisted Netflix could grow back on its own. “We have the scale, profitability and free cash flow to continue to grow this business,” he noted.

The Netflix exec dismissed the company’s recent stock decline as part of the inevitable ups and downs of the fledgling online streaming business.

“We have had experiences from which the market is detaching itself [our] core business and you need to demonstrate that the thesis still works and will work in the long term. There’s a lot of uncertainty in the world today, and if they get anything that shakes the foundation of the narrative, they get nervous.”

Noting that streaming still only “makes up about 10 percent of what people do on TV,” Sarandos argued that there’s still “a lot of room to grow” for Netflix.

Sarandos again defended his stance in support of controversial Netflix comedy specials by Dave Chappelle and Ricky Gervais, saying Netflix has “has always been a patron of the arts” and that is the service “Programming for people with a real diversity of tastes and sensibilities,” noting that what is considered objectionable varies from person to person.

“We’re not going to make everyone happy, but that’s the beauty of on-demand: you can turn it off. The reason comedy is difficult is because we don’t all laugh at the same thing. We all cry at the same thing, so drama is a little bit easier to pull off, but when it comes to comedy, it’s very different,” he said. “Part of the art form is crossing the line, and part of the art form is finding the line only by crossing it sometimes. Supporting expression is really important.”

Referring to Chapelle, who has been slammed by the LGBTQ+ and trans community for some of the jokes featured in his recent Netflix specials, Sarandos doubled down on saying Netflix would fight for the right to grant its content “all the way to the Supreme Court.” demonstrate. He noted that Netflix “never took [a Chappelle special] anywhere in the world,” saying that “diversity of thought and expression is very important to defend. It’s good for culture, it’s good for society – not just for the US, but everywhere.”

However, Sarandos conceded that he “should have been more empathetic” to some of his own employees at Netflix when they revealed they were upset with some content on the platform. “That’s what I regret, but the decision was very important worldwide,” he said.

Cannes Lions 2022 runs until Friday 24 June.