Netflix has a way of pushing the entertainment industry in new directions, first reluctantly and then inexorably. Alarmed by its ballooning production budget, the studios barreled into big losses in streaming, even as Netflix started reporting billions in profits. Now, the streaming giant may pull the competition in a different direction, as it teased an eye-popping statistic about its still-nascent advertising business this week.
Wall Street wasn’t impressed with Tuesday’s business-as-usual, slow-growth earnings report: The stock dropped 3% Wednesday. But some investors seized on a buried tidbit of information promising revenue acceleration ahead: Netflix said it was making more money in advertising from its new, cheaper plan with commercial breaks than it was losing on the lower monthly price.