Netflix's co-CEO was asked why the company changed its mind after saying it would never introduce ads or live sports. Here's how he responded.

• Netflix co-CEO Ted Sarandos spoke at the 2024 Fast Company Innovation Festival.
• Sarandos was asked about Netflix's shift from rejecting ads and original content to embracing both.
• Netflix's ad-supported plan has since taken off, helping the company buck a stock slump.

Netflix has drawn some pretty clear lines in the sand in the past about what it wouldn't do — and then jumped past those lines with both feet.

The streaming giant once said it would never introduce ads and dismissed the idea of livestreaming sports events.

But Netflix has now embraced both. So how does the company think about changing its mind?

Netflix's co-CEO, Ted Sarandos, was asked about past switch-ups on things it said it would "never" introduce to the platform during an interview at the 2024 Fast Company Innovation Festival on Wednesday.

In short, Sarandos said Netflix "should always reserve the right to get smart."

Sarandos said that "never" is a "focusing word" that helps teams concentrate on present objectives.

"It's not that we're being dishonest with ourselves," he said. "As, in the current climate or in the current conditions, I don't see us doing some of those things. Conditions change, and climates change."

For several years, Netflix cofounder and former CEO Reed Hastings had staunchly reaffirmed that the streaming giant was not interested in becoming ad-supported. The company's cofounder told Variety in 2020 that there is no "easy money" in advertisements, as Netflix would have to compete with ad giants like Google and Facebook.

However, Hastings would later say, after Netflix launched its ad-supported subscription tier in 2022, that he was "wrong" to fixate on competitors.

"I wish we had flipped a few years earlier on that," he said.

The move has paid off so far. Netflix's ad-supported plan has since crossed 40 million global monthly active users, up from 5 million last year.

Sarandos also looked back on when Hastings was also firmly against creating original content, which is now some of Netflix's most popular shows offered.

"I think Reed might have even said on an earnings call, 'We will never do original programming,'" Sarandos said.

The company was initially focused on garnering high viewing engagement by providing a lot of content at as low a price as possible, he said. Essentially, Netflix was looking at distribution, not creation.

However, Sarandos was concerned that "not all content was created equal."

"I kept thinking about how are we going to do this if we don't have content that defines our network?" he said.

Sarandos said that if other networks were to start putting their own shows on their own streaming services instead of selling them to Netflix, the platform "better start getting better at it."

And it did. Netflix's second original show, "House of Cards," premiered in 2013. The show, which ran for six seasons, received major acclaim, winning 7 Emmys and two Golden Globes.

Netflix is now estimated to account for a quarter of the world's streaming original series, according to data from Parrot Analytics. Several shows have amassed not only major viewership but also critical acclaim, with hits including "Stranger Things" and "Baby Reindeer," which just won four Emmys.

Sarandos said that these 180s on previous content decisions are simply a business response to evolving opportunities and situations.

"These are businesses," he said. "These are not religions."