Netflix has thrived on the fact that, unlike so many others in this sector, it has no commercials on its service – even as the SVOD juggernaut is potentially missing out on a bunch of revenue by not selling advertising.
This week, Wall Street analysts at Nomura’s Instinet have calculated that Netflix could generate more than $1 billion in ad revenue per year if it launched a free-to-consumer plan with advertising.
Said numbers work on the assumption that Netflix introduces this new tier in 2020 which would become the equivalent of around 25% of its paid subscriber base by 2021.
However, the analysis doesn’t account for an ad-supported service cannibalising the company’s existing business with people cancelling or downgrading their plans and thus potentially losing revenue. Netflix has around $18.9 billion in long-term content-spending obligations and $10.3 billion in debt.
Netflix reps have previously said being ad-free is integral to their brand and only this week they threw shade at NBCUniversal’s upcoming ad-supported streaming service because of its use of commercials.
Source: Variety
