• by Wayne Friedman , October 13, 2023

In the wake of Netflix revamping its senior advertising executive suite with the promotion of Amy Reinhard, replacing Jeremi Gorman, one analyst now believes there will be a major change with a core Microsoft Xandr ad platform.

Steve Cahall, media analyst of Wells Fargo Securities, projects Netflix will take more ad responsibility in-house away from the Microsoft Xandr operation.

Xandr has been Netflix’s central ad operations platform since starting up under what sources say is a two-year deal.

Cahall estimates that the change will cost around $300 million in advertising operations investment for 2024. The company will also spend another $600 million to expand its advertising effort globally.

“We think Netflix will look to take more in-house and move away from Microsoft in order to build a walled garden.”

Netflix will also look to find a way to boost the scale of its advertising-option to around 30 million U.S./Canada. This has been a key sticking point for media agency executives -- at least in terms of what they were initially expecting in its first year in operation.

“It has been a tough sell and the scale just isn’t there,” one veteran media executive recently told MediaPost.

Sources say the global ad-option scale is currently around 10 million monthly active users. Cahall’s estimates is that number is around five million in the U.S. and Canada. 

Cahall says that ultimately, “Netflix's challenge is to take ad share from media companies that have sports, non-sports, streaming, and are deeply embedded with brands.”

As far as the always highly scrutinized annual TV-movie production content spend, Cahall has lowered his final 2023 estimate to $13.4 billion.