Netflix co-CEO Ted Sarandos used a keynote appearance at the Cannes Lions conference in France Thursday to confirm partnership talks with Roku, Google and Comcast for ad sales, but he shot down rumors that Netflix might actually buy Roku.
“We don’t need it,” Sarandos told his interviewer, technology journalist Kara Swisher, when asked about a possible Roku acquisition. “I don’t know where that came from,” he added, referring to the rumor itself.
Rumors of a possible acquisition of Roku by Netflix emerged earlier this month, when Roku employees were suddenly blocked from selling their company stock.
Facing erosion of its global subscriber base and declining revenue growth, Netflix is trying to quickly ramp up the ability to integrate and sell advertising for a discounted tier only partly subsidized by subscription fees. The logic behind speculation was that Netflix could quickly ramp up ad sales acumen by purchasing a company like Roku with expertise in advanced advertising — and a depressed stock valuation.
In terms of the partnership talks, Sarandos said Netflix’s plan is to create “a pretty easy entry to the market, which we’ll build on and iterate to make Netflix a destination for users. What we’ll do first is not representative of what the product will be ultimately. Start light, keep it simple and iterate fast.”
HBO Max launched a $9.99-a-month partially ad-supported alternative to its flagship $14.99 service last year, and Disney is looking to a similar model for Disney Plus. Netflix wants to launch its ad-supported tier by the end of 2022.
With a recessionary economic environment and high inflation taking hold, time may be of the essence.
A survey conducted by Evercore ISI in May found that Netflix user satisfaction fell 7% during the second quarter to the lowest point for the service since 2012.
For his part, however, Sarandos conveyed no rush.
“We’re in the early days of this evolution of watching — the way that people watch and consume television,” he told Swisher. “Today, we’re about 10% of what people do on TV, and about 30% of the streaming. We look at that and say there’s still a lot of time that people are watching linear TV. You look at the growth of streaming as a percentage of total, and there’s a lot of room to grow.”
Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
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