- Netflix considering free ad-supported service.
- Currently focused on current projects.
- Ad revenue potential larger than Hulu in long term.
During the company's fourth quarter earnings call, Netflix co-CEO Ted Sarandos stated that the company is keeping an eye on the potential for a free, ad-supported streaming service, but any move into that category would not happen in the near future as the company is currently focused on its crackdown on password sharing and the recent launch of its ad-supported tier.
Co-CEO Greg Peters provided an update on the ad-supported tier, saying that the product experience is good, engagement is similar to the ad-free plan, and that there is a long list of improvements that the company would like to make.
Peters also said that the take rate has been solid and that the lower price point has driven incremental membership growth. CFO Spencer Neumann stated that Netflix's ad business could be even larger than Hulu's in the long term, with the goal of advertising being at least 10% of the company's revenue. Netflix's stock rose 7% following its fourth quarter earnings results, due to subscriber additions coming in above company guidance.
Even though the company didn't meet the expected forecast in terms of revenue and earnings per share, the company announced that it expects revenues to total $8.17 billion with earnings per share forecast to total $2.82 in the current quarter.
Netflix no longer offers subscriber growth forecasts. Additionally, the company also announced that co-CEO and co-founder Reed Hastings would step down from his role leading the company, with COO Greg Peters joining current Netflix co-CEO Ted Sarandos in that role. Hastings will now serve as the company's executive chairman.