Most readers likely have a strong opinion about the direction Netflix (NASDAQ: NFLX), one of the most well-known consumer-facing internet businesses, is heading. After Netflix shed 1.2 million subscribers in the first six months of 2022, naysayers thought the company's days of rapid expansion were history. Netflix's lower-cost ad-based subscription is showing promise.
Roku (NASDAQ: ROKU) shareholders have had some good reasons to tune out when it comes to the streaming video platform company. Its revenue growth slowed to a crawl through late 2022 even as its operating losses expanded. While Netflix has won praise from Wall Street by moving into the digital advertising business, Roku's recent results show that this is a poor operating model to rely on for most of your growth.
Netflix (NASDAQ: NFLX) expects advertising to be a big part of its business. On its fourth-quarter earnings call, outgoing co-CEO Reed Hastings asked CFO Spence Neumann how many years it'll take the company to surpass Hulu's advertising business. The Hulu streaming service, controlled by Walt Disney (NYSE: DIS), had a 15-year head start on Netflix in advertising, and it has grown to become a leading seller of connected TV advertising in the United States.