Netflix raised eyebrows with the $US140 million ($182 million) budget it handed over to Martin Scorsese recently, but according to a Reuters report, it's looking to pay out a lot more for some billboard real estate. The move could be seen as an escalation of its cold war with Hollywood.
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Take one look at Regency Outdoor Advertising's website; it's more than clear that this is an old-school company. But in an age of product placement, micro-targeting and auto-playing video ads, billboards are still an effective way to get your brand name out in front of a captive audience. Netflix loves billboards, and Reuters claims it's competing against other unnamed bidders to take over the Los Angeles-based billboard company. Netflix declined to comment to Reuters on its reported offer of "more than $300 million" ($391 million) bid. We've requested confirmation from Netflix, which declined to comment, and Regency Outdoor Advertising, which did not immediately respond.
As MarketWatch points out, Netflix shares dropped by two per cent in pre-market trades on Friday as the billboard news broke. Investors could be nervous that the streaming giant's runaway spending is expanding into new realms while it has amassed over $US20 billion ($26 billion) in debts and liabilities. But the company's CFO David Wells made it clear at an investor conference in February that Netflix plans to heavily increase its marketing alongside the 700 original series it has planned for 2018. "We used to think every incremental dollar was best spent on content," Wells said. Now Netflix sees marketing as "a multiplier on the content spend".
If you've been to Los Angeles lately, you've probably noticed that currently there are approximately two types of billboards: Weed dispensaries and Netflix ads. Netflix is absolutely everywhere you look. It's unclear how much Netflix spends to maintain those billboards, but it could see this reported offer as a long-term cost saver. Netflix could also be looking to muscle around the Hollywood establishment in the contest for eyeballs. However, this could also be a defensive move, if Netflix anticipates greater pushback from legacy media companies who have their own ad spaces.
Netflix tends to get creative with its billboards, prompting people to share images on social media. Most prominently, the "Netflix is a joke" billboard appeared to be cryptically throwing shade at the company before it was revealed as a promotion for Netflix's own stand-up specials. A glowing neon Stranger Things billboard appeared outside the most recent New York Comic Con. And a life-size pod person mannequin was embedded in LA bus stops this year.